Norway's DNB rejects prediction on real estate
In a November 29 interview, DNB ASA Chief Executive Officer Rune Bjerke said the bank expects house prices in Norway to increase next year. Bjerke's statement of the bank rejected projections that the Norway real estate market would experience a hard landing, and called the projections unfounded.
Bjerke said, "We don't expect any sharp decrease in house prices but actually believe there might be a very limited price increase and potential upside for 2014 and stable prices in the year or two after that. The likelihood for a hard landing is very, very limited. While you can never exclude a shift, it's hard to see the reasoning behind any hard landing right now."
Nobel Laureate Robert Shiller declared in 2012 that the real estate market in Norway was in the grip of a bubble. Since then, speculation focused on when housing prices would peak and how much in percentage the prices would drop. Scandinavia's biggest lender Nordea Bank AB said last month that property prices in the country could slump to as much as 20% in the next two years.
Bloomberg said in its report that Norway was able to withstand the worst of the debt crisis in Europe, thanks largely to its USD800 billion sovereign wealth fund. Despite a slowed economic growth, a report said last week that registered unemployment recorded at 2.6% in November, which signaled that Norwegians could still afford to make payments on their mortgage. Berke also credited the country's low unemployment, along with low interest rates and population growth as the main factors that allowed the country to avoid a shock in the housing market.
Norway's central bank predicted that its mainland gross domestic product will expand 1.75% this year and 2.25% the succeeding year. GDP does not include oil and gas production. Norway's GDP in 2012 had grown 3.4%.
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