The drivers of Norway's house prices

Urban Sila

No 1599, OECD Economics Department Working Papers from OECD Publishing

Abstract: In this paper, we explore the drivers of house prices in Norway, using a cross-country panel framework. Empirical results confirm that house prices are determined by numerous demand and supply factors, including income, demographics, macroeconomic conditions, stock of housing and institutional features. The results suggest that high and rising house prices in Norway are principally driven by market fundamentals – high household incomes, wealth, low interest rates and a growing population. Yet, despite strong fundamentals, comparing predicted house prices as estimated by the model and observed house prices suggests that house prices in Norway have been overvalued to a degree since the global financial crisis. Some structural and regulatory features of the Norwegian housing market also put upward pressure on prices: the favourable tax treatment of home ownership, strict rent controls and lax tenant-landlord regulations. Improving further the responsiveness of housing supply to demand could also ease price pressures.

Keywords: house prices; housing market; land-use and rental regulations; mortgage markets; Norway; panel estimation (search for similar items in EconPapers)
JEL-codes: G21 H20 H24 R21 R31 R38 (search for similar items in EconPapers)
Date: 2020-02-10
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1787/cb065dca-en (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1599-en

Access Statistics for this paper

More papers in OECD Economics Department Working Papers from OECD Publishing Contact information at EDIRC.
Bibliographic data for series maintained by ().