He was right about house prices in corona 2020. Now he’s heading back to the think tank – E24

“As larger sections of the population are vaccinated and we can start traveling again, I think a lot of this housing mania will start to subside,” Macic told E24.

He is chief economist at the Forecasting Center and has calculated a house price increase in 2021 quite different from what he has read in the newspaper headlines:

Only 3.5 percent more expensive homes nationwide by the end of next year than we have now. This is just more than what Norwegians receive in pay increases in a normal year.

– We do not believe in such explosive growth in house prices in 2021 as others, observes the chief economist.

There has been no shortage of warnings about a hot new year in the housing market.

Some in the housing industry are actually experiencing stronger price growth than the crown year 2020, where the average home according to the latest figures has become 7.8 percent more expensive in twelve months (excluding December, where the decision is only made in the new year).

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In a 2021 Aftenposten survey, Macic’s housing forecast and the Forecast Center stand out as the most moderate.

And perhaps the chief economist’s arguments are worth listening to:

When it became clear this spring that Norway would not escape the economic fallout of the coronavirus either, several economists lowered their estimates for the housing market. Price drops were predicted, which never came.

But Macic warned up front of a completely opposite effect: Already two weeks before Norway’s shutdown, while only 17 corona-infected people across the country had yet to be confirmed, he argued that the virus would trigger hotter bidding rounds.

Today, most people agree that the pandemic is one of the main reasons why the evolution of house prices in 2020 was so strong, in part because it forced Norges Bank to introduce the rate. of lowest key policy in history to stimulate the economist.

Five percent, or 20?

And while the central bank governor warns that the zero interest rate will remain intact for some time, many predict that the heat waves in the housing market will continue.

Especially in Oslo, where predictions of double-digit price inflation abound. Property stop Baard Schumann has stated that prices in the capital will rise 14 percent in 2021.

Home developer and former star broker Terje Tinholt predicts Oslo prices will rise 20 percent.

– House prices in Oslo will skyrocket, he told Finansavisen in November.

Macic dismisses the 20 percent warning as “highly unlikely.”

The Forecast Center itself estimates “only” five percent house price growth in Oslo next year, that is, slightly above the 3.5 percent estimate for the entire country.

And why not more?

Four arguments against the price shock

Here are Macic’s four arguments for why 2021 is unlikely to deliver the strong house price growth other experts have predicted:

1. Interest rate cuts are driving home prices higher than the low interest rates themselves. The central bank’s interest rate cuts have already been made and interest rates will rise in the fourth quarter of 2021.

– Low interest rates will continue to have its effect, but it won’t stimulate house prices as much as it has this year, says Macic.

2. Mortgage regulations will continue in 2021, and in pressure areas with high price levels it can be an even greater price brake: more and more mortgages are “stuck” in the regulation’s maximum loan limit of five times income, they show. Figures from Finanstilsynet.

– As long as you are not allowed to take on soaring debt, you can’t continue the soaring growth in house prices. Mortgage regulations prevent people from bidding in the sky, says Macic.

3. The price driving effect of the housing shortage in Oslo is overblown. 2,500 completed homes are expected to be built next year, which is certainly lower than population growth indicates, but not much lower.

– I have had a long time for housing.

– I think that those who give the highest price forecasts for Oslo put too much emphasis on the low supply side, says Macic.

Four. And, not least: the social effects of the corona crisis are likely to change, as Norway, along with the rest of the world, has started vaccinating and is on track to control the virus.

Macic argues that the closing of the company has triggered a “housing mania” that is unlikely to be as strong next year.

– During the pandemic, we have spent a lot of time at home and have had a lot of time to focus both on our own house and on the next one. This has led to a pull towards homes that have driven up prices. But little by little in 2021, I think we will start to return to society a little more, he says.

NB! It’s worth noting that house price growth over a year can be measured in slightly different ways, so different forecasts are not always directly comparable – one way, which E24 also uses when we write about annual growth in homes. prices, is the evolution of prices for twelve months, that is, from New Year to New Year. However, some prefer to compare average house prices throughout the year with the average of the previous year.