Norwegian house prices, which haven’t declined on an annual basis since 2008, aren’t a threat to economic growth in the Nordic country, according to the head of its largest lender.
The economy of the world’s second-richest nation per capita is “very robust,” with a growing population, low unemployment, increased disposable income and interest rates that will “stay low for a long time,” DNB ASA Chief Executive Officer Rune Bjerke said in an interview in Oslo today. “It’s really hard for me to see signs of a bubble within the housing market.”
Norway’s Financial Supervisory Authority warned on March 13 that the main domestic threat to the economy is an overheated property market as borrowers bet rates will stay low. House prices could fall “markedly,” threatening to expose the economy to “substantial” knock-on effects, the regulator said.
Norges Bank the next day cut its benchmark interest rate by a quarter percentage point to 1.50 percent, following a half point cut in December, as policy makers judged the threat of krone appreciation to be a more serious risk then development of a housing bubble.
Norwegian house prices jumped 7 percent to a record last month, according to the Real Estate Brokers Association. Property values have risen almost twice as fast as disposable incomes since 1992, according to data from the central bank.
Lenders in Norway are doing a “satisfactory” job of monitoring the level of household debt and there are “good controls” in place, DNB’s Bjerke said.
To contact the reporters on this story: Stephen Treloar in Oslo at email@example.com; Josiane Kremer in Oslo at firstname.lastname@example.org
To contact the editor responsible for this story: Christian Wienberg at email@example.com