Norway Regulator Fears Housing Bubble “Isn’t Sustainable”
Amid the collapse in crude oil prices, the Norwegian central bank cut rates in December (after 1000 days on hold) and is likely to cut again as economic growth stalls. However, the country’s financial regulator iswarning falling interest rates risk pushing the Norwegian housing market beyond its breaking point into a “self-augmenting spiral.” With prices up 8.1% YoY, and up 85% nationwide in the last decade, even Robert Shiller warned of Norway’s housing bubble in 2012 – and since then household debt (and home prices) have surged. As Bloomberg reports, Morten Baltzersen, head of Norway’s Financial Supervisory Authority stressed “continued rapid growth in debt and house prices isn’t sustainable.” Unintended consequences?
As Bloomberg reports, a combination of plunging oil prices and falling interest rates risks pushing Norway’s housing market beyond its breaking point, the financial regulator said.
Norway’s housing market, which Nobel laureate Robert Shiller all the way back in 2012 said was in a bubble, has been inflated amid an oil boom that has driven wealth creation and kept unemployment below 4 percent.
Norwegians have more debt than ever before, owing their creditors about twice their disposable incomes, a level that Olsen and FSA’s Baltzersen have said is unsustainable.
And it’s about to get worse…
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