Norwegian home prices fell in August for the third time in four months, in what’s likely to support expectations of an imminent end to monetary tightening.
Prices fell a seasonally-adjusted 0.6% last month from July, after a revised gain of 0.1% the previous month, according to data published by Real Estate Norway on Tuesday. The central bank had forecast a dip of 0.1% in its latest monetary policy report in June.
The data may back speculation that policymakers will signal no further interest rate hikes after an expected quarter-point increase to 4.25% later this month. Investors have so far leaned toward projecting a peak of 4.5% as core inflation remains high and the krone has been among the weakest performers in the G-10 space of major currencies, feeding imported price growth.
The figures are “of course not weak enough to keep Norges Bank on hold” at its next rate-setting meeting on Sept. 21, “but another data point that indicates that this will be the peak,” Frank Jullum, an economist with Danske Bank A/S, said. Partly helped by the government easing mortgage rules last December, the residential property in the fossil fuel-rich nation has withstood the cost of living surge better than its Nordic peers. Adjusted home prices have eased just 1.6% from their peak a year ago, compared with a drop of about 12% in neighboring Sweden and a 7% decline in Denmark. Still, the second half looks bleaker for Norwegian home valuations, analysts said.
“Unsold homes are at a high level, and the effects from Norges Bank’s recent and anticipated rate hikes are expected to take some time before fully affecting prices,” DNB Bank ASA’s economist Oddmund Berg wrote in a note to clients. “Consequently, we expect seasonally-adjusted prices to fall continuously until year-end.”
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