Despite Plummeting Demand, Housing Market Sees Record-Breaking Sale

Demand has plummeted in the new housing market. Nevertheless, there are some who can still afford NOK 260,000 per square metre.

The most expensive apartment in the first sales stage has been sold in the Mariakvartalet in Bjørvika in Oslo. The apartment is marked in red. Photo: 3DEstate/Lund og Slaatto Arkitekter/OSUPublished:

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A 119 square meter upcoming penthouse in the Mariakvartalet in Bjørvika in Oslo has recently been sold for NOK 30.75 million.

This is what real estate agent Lars Bratseth in Røisland and Co tells us. And the sale was not a foregone conclusion.

– The Maria quarter has had an absolutely fantastic start to sales in a market that everyone knows is very tough. At the same time, Bjørvika is a bit of a city within the city, which has its own position among people, says Bratseth.

At the start of sales for the first stage in the Mariakvartalet, 55 out of 78 apartments were sold, he says.

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Waiting for brighter times

And around two weeks ago, one of the two or three interested parties chose to go for the most expensive apartment in the class.

– We have had plenty of time to build this up, that is part of the key. We have had good contact with customers for a long time. And then there are a small number of people who have the capacity, ability and willingness to buy in the more expensive segment, Bratseth admits.

But the investment able to be smart.

– It is a factor for Mariakvartalet that it is handed over in three years. So there are many people who believe – we do too – that at one point or another this dark time will clear up, and then we will move towards brighter times.

– The chance of getting a very nice housing trip up to 2026 is very good. At that time, almost the whole of Bjørvika was additionally developed. After that, there aren’t many opportunities, says Bratseth.

A 3D rendering of the view from the 30-million apartment. Photo: 3DEstate/Lund and Slaatto Architects/OSU

Fell since summer 2021

The 30-million-euro apartment is admittedly in a distinctive price segment, but can still be said to go against the flow in the market today.

Chief economist Hilde Karoline Midsem at NBBL clarifies that she is commenting on the new housing market on a general basis, and not against this specific apartment sale.

At the same time, the trend is clear.

New home sales have fallen continuously since the summer of 2021. In October, it was 28 per cent lower than in October last year.

– In this sense, it is now at a level for October that is lower than what was recorded during the financial crisis. Very few new homes are sold now, says Midsem.

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New home sales plummeted 28 per cent in October: – Below financial crisis levels

The reason is largely the low demand. This in turn has led to a drop in construction, as a result of failing sales. Commencement of new homes in October 2023 was 12 per cent below October 2022.

– There is some lag in that movement, we only saw it coming at the end of last year. Then the low sales figures had a serious impact on construction activity, explains Midsem.

Soft landing

There is also nothing in the expectation barometers to indicate any upswing in sales at first, says the chief economist. Rather, the demand for new homes will only pick up when security returns.

Midsem compares this market dynamic to a tanker. It takes time to swing. The cost side and the debt, i.e. how the Norwegian economy will handle the powerful interest rate medicine it has received, will be decisive.

However, she points out that unemployment is still low, and that everything points to good chances for a soft landing.

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– We will gradually overcome the price increase without any clear setback in the Norwegian economy. Demand will eventually pick up. And now construction is at an incredibly low level. What then happens to prices and pressure in the market?

This is where the tanker metaphor comes in.

– The launch that is happening now will hit the market a couple of years from now. This points to the fact that we will experience pressure in a couple of years, when demand, as most forecasts indicate, has reason to pick up, and the supply of new
housing is low.

Get today’s most important economic news here!

2023-11-28 18:58:54


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