Market real estate in Norway is going through a crisis. There are quite a lot of properties for sale, but there are not many people willing to buy them. Unfortunately, this is not the only problem with this industry. Siv Jensen recently received a warning from EU authorities about the risky situation on the Norwegian real estate market. The European Systemic Risk Board (ESRB), an independent European Union body that exercises macro-prudential supervision over the European financial system, emphasizes in its appeal that the real estate situation affects the entire Norwegian economy. What else do we know about this case?
Real estate market in Norway - high prices are not the only problem
What is the cause of this situation? Norwegian household debt and high real estate prices are a major problem here. In a special Siv Jensen statement we read:
“High farm debt homework and high real estate prices are a weak point in the Norwegian economy. The importance of our efforts to introduce measures to ensure bank stability and contribute to a more sustainable formation of household debt was emphasized.
Will it be harder to get a loan?The real estate market in Norway - changes in credit regulations
The Norwegian Financial Supervision comes out with a proposal to tighten the regulations related to granting mortgage loans. What did he propose in practice?
- Limiting the maximum debt limit from 5 to 4,5 times the borrower's gross annual income. Example: a person earning CZK 500.000 per year will be able to borrow a maximum of CZK 2,25 million. As of today, such a borrower has a chance to receive a loan of 2,5 million crowns.
- Reduction of the so-called flexibility factor from 10 to 5 percent.
What do borrowers say?
The real estate market in Norway is having problems - this is an undeniable fact. Unfortunately, the above-mentioned remedial proposals caused considerable opposition from the borrowers themselves. The new idea will hit primarily young people who want to go "on their own". Not every young person can count on considerable financial support from parents in buying their own apartment. Tightening credit regulations may close the way for such people to financial independence and a good start to independent adulthood. Will the changes come into force? As it usually happens - time will surely show us.
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