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Solberg: Norway Bubble Risk Is Overblown in Supply Squeeze


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Solberg: Norway Bubble Risk Is Overblown in Supply Squeeze

Business

Category: Financial / Investment

“I argue against a housing bubble because a housing bubble is an influx of prices without demand; in Norway it’s demand that’s the biggest reason,” Solberg, 51, said yesterday in an  interview in Oslo. “I don’t think house prices will fall.”

The comments signal a potential Conservative-led government won’t step in with measures to cool the housing market that the country’s financial regulator has warned is the biggest threat to the economy. Near-record low interest rates and falling unemployment boosted home prices about 27 percent since 2008, according to the Norwegian Real Estate Brokers Association.

Robert Shiller, the co-creator of the S&P/Case-Shiller home-price index who predicted the U.S. subprime mortgage crash, this year warned that Norwegian policy makers should “start worrying now” and that the market may be in a bubble.     The Financial Supervisory Authority has warned that house prices may fall “markedly,” threatening “substantial” knock-on effects. The regulator introduced guidelines last year that limit mortgages to 85 percent of the value of the home.

Source: Bloomberg News

Published: September 22, 2019