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Denies Bursting Bubble in the Real Estate Market
Real estate news By Norway Post
17.09.2007 08:44
Norwegians primal concern is to live, not to make money on real estate. Therefore, the real estate market will not have the bursting effect of a “bubble”, according to forecaster, Bjoern Erik Oeye. Harald Magnus Andreassen in First Securites identifies a bubble by using 10 chacteristics. So far, he says, Norway only matches seven of them.
The market has experienced a high increase in prices, which has been an incentive for people’s capital gain in purchasing real estate. People expect prices to keep rising, which lead to a pressure to buy, a weak understanding of the risk involved, and a higher increase in prices than in people’s earnings. People also have a simplified perception of how the economics in the real estate market dominate, and the market’s bursting effect is not lessened by the media’s attention.
Oye agrees with most of Andreassen’s analysis, but denies that people are still awaiting a price increase, or that they invest in real estate solely for the capital gain. He believes the majority buys homes they plan to live in, and that there is a huge gap between them and the few persons who have two million kroner to spare for investments.
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