Next year will see a downturn in the Norwegian property market, with some parts of the country much more affected by the dip than other areas.

House prices will likely fall due to interest rate increases in 2021, 2022 and 2023. The key policy rate in Norway is currently 2.75 percent. However, Norway’s central bank, Norges Bank, will likely raise the rate to three percent.

“The interest rate has a great impact on house prices, and higher interest rates will further reduce the price development in 2023. We expect that the sharp fall in house prices through the autumn of 2022 will continue into the first half of the year, but that the development will be more positive in the autumn of 2023,” Henning Lauridsen from Real Estate Norway said.

Real Estate Norway expects home prices to fall around 3.5 percent nationally. House prices in Oslo will see much more significant falls, of approximately six percent. However, other parts of the country, like southern and south-western Norway, were likely to see more positive price development.

“Higher interest rates hit Oslo harder than other cities due to high prices and debt levels. We, therefore, expect house prices to fall somewhat here during the first half of the year. In the longer term, Oslo has a housing deficit measured against population growth. This means that we expect prices to rise again in the longer term in Oslo,” Lauridsen explained.

Norway’s other largest cities are set to see more modest increases and decreases of around one percent.