Headline: Nordea Predicts National Housing Price Increase of 9.3% by 2025
In a recent analysis, Nordea’s senior macro and currency strategist, Sara Midtgaard, forecasted a significant growth in Norwegian housing prices, anticipating an increase of 9.3% nationally by the end of 2025, measured as a 12-month growth from December. This projection is substantially higher than the Norges Bank’s current prognosis of 6.3%.
The regional housing price dynamics have shown considerable variations in the past, with Bergen poised to lead with an estimated annual growth rate of 11.5%, while Bodø may experience a dip of 1%. However, Nordea expects the price growth to even out across the country in 2025, emphasizing that this depends on the number of interest rate cuts.
Interest rate cuts are a crucial factor in this equation. Midtgaard noted that more rate cuts could potentially exacerbate the disparity between Oslo’s and the national average housing price growth. Historically, interest rate changes have had a more profound impact on urban areas, particularly in Oslo and Tromsø, due to the relatively inelastic supply of housing in cities.
In a hypothetical scenario where Norges Bank decides to cut interest rates four times in 2025, Nordea’s housing price model estimates a potential growth of 15% nationally and up to 20% in Oslo. However, Nordea expects only two rate cuts in 2025, suggesting relative parity between national and Oslo’s housing price growth this year.
According to Nordea’s projections, Norway‘s housing price growth is expected to be around 9.3%, with Oslo potentially seeing a higher increase of 12.2%, measured as a 12-month growth by December.
Subhead: Limited Housing Supply Drives Prices Up
DNB Eiendom’s director, Renate Sørestrand-Hansen, highlighted the stark contrast between the current housing supply and the demand, with the number of unsold homes at around 13,000 in January 2025, down from approximately 18,000 a year ago. She believes that the limited supply, coupled with high demand, will put significant upward pressure on housing prices going forward.
Moreover, Sørestrand-Hansen emphasized that current housing construction levels are not keeping pace with the demand in areas experiencing the highest pressure, further driving up prices. She also attributed the expected price surge to the interest rate cuts from Norges Bank, underscoring the historical correlation between declining interest rates and increasing housing prices.
