Housing Bubble May Burst

Photo : Asbjørn Floden.

The think tank requires the government to take action before the bubble burst, writes Dagsavisen. 

In a report by Manifest Analysis, three immediate measures are proposed to calm the nervous housing market.

The first advice is to reduce the ceiling of deduction of interest rates in housing loans to 2 million NOK. Thus, it becomes less attractive to have high debt. Secondly, wealth tax on residents more than one must be increased gradually from 50 to 100 percent to prevent speculation. Moreover, the think tank urges building more houses under municipalities’ control.

Uncontrollable Inflation in Housing

House prices have increased by 0.7 percent in one month from January to February. In one year, the increase in prices has been 8.5 percent.

Prices go up for all housing types. The most dramatic increase has beeen in detached houses with 0.9 percent from the previos month and 9 percent in one year.

Apartment prices have also risen by 0.6 percent from January and 9.3 percent from 2012 February.

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