Sunday, December 8, 2013

Reality Hits Statistics Norway

As I reported earlier, Statistics Norway didn't have the resources needed to perform a house price forecast in September, just when it started to be clear that the prices are heading down. Fortunately they have put their house in order and came out with a forecast last week:

Source: (in Norwegian) (Sep'13 forecast is my assumption of what it could have looked like...)

It seems they have abandoned all hope for a price increase in 2014. But Norwegian "wealth effect recipients" don't need to worry, as SSB has also abandoned their linear extrapolation. It's going to be a nice little dip, a lot less steep than in 2008-2009, and then the sky is the limit again?

I read the report, searching for a good explanation for the shortness of the dip, and this is what I found:

The Norwegian economy is going to perform sub-par ("lavkonjuktur") throughout the forecast period (2014-2016), with GDP growth at 0,7 %, 2,1 %, 1,9 % and 2,5 % in 2013, 2014, 2015 and 2016, respectively. But despite this sub-par performance, income growth will remain high, which will give new support to house prices when the usually short-lived (according to SSB's model) psychological effects wear out.

I have to note that SSB expects (Brent) oil price to decline gradually throughout the period and to end up at around USD 90 per barrel in 2015. I will not go into more details, but the overall picture is that nearly everything seems to just flatten out nicely. More about this in my next post!

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