Norwegian Housing Market Watch 2020.
Are high prices on norwegian real estate a problem?
It’s commonly agreed that norwegian prices on real estate is expencive, challenging potential buyers who want to enter the market. High prices can be problematic in many ways:
1:Prospective individuals or families chooses not to move into our most productive citites due to high prices. It’s important for any country that skills and needs are matched. If the real estate pricest forces labour to live a different place, values related to BNP is lost. It is the information economy’s ideas we’ll live off of – therefor our heads need to be in one place.
2: A long commute a: Give productivity because of a long journey back and forth – which could in stead have been used to work. b: higher Co2 emissions than needed – because of citie’s effective settlement pattern regarding transport and heating.
3: Rising differences between real estate owners and those left on the curb. Real estate from a nominal view, has never been higher. Again prices must be viewed in correlation to salary levels – and interst.
Here Market Watch uses the Nurse-index and family-index to identify if there are areas in Norway with too high real estate (RE) prices.
What is the nurse-index (NI)?
NI measure how great a % of sold RE a single nurse can afford to buy. If a nurse can buy a % of RE in a city, prices are too low. Oposingly if she can’t buy any, high prices are a concern.
The index has been worked on over time, using a selection of cities. The average nurse income is great for this use, because it represents a typical norwegian income, and isn’t volatile. Average nurse salary: 560880 NOK.
numbers in USD. *text might be incorrect
Here’s where it gets interesting.
How big a % of RE could a single nurse buy in 2019? Oslo and surrounding areas had the lowest number. Can you guess?
3 out of 100 RE in Oslo & surrounding areas. In Bergen city, the number was 34 out of 100 RE. Furthermore, in cities such as Fredrikstad, Sarpsborg, Skien a nurse was able to buy 40% of all available RE.
How has the nurse index been in Norway as a whole.
Here – the national nurse index shows that pre-financial crises RE was at its most expensive. Cheapest in 2015. National charts can hide a lot, so lets look at the cities.
Cities follow each other closely but three exceptions. Stavanger from 2007 to 2014, Oslo after 2014 and Kristiansund after 2011.
To sum it up.
The nurse-index show that RE prices in general were relatively low during 2019 -given today’s interest rate, salary level and the bank’s moneypolicy.
This means that the rising prices on RE in norway, can be explaines with lower interest and increase in wages.
This is true for all of norway, except Oslo and surrounding areas.
Here prices have increased so much, that increase in salaries and lower interests hasn’t been able to pick up.
The reason for this index is to illustrate if an average income can buy a home in any given city.
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