Selvaag Bolig ASA, a homebuilder focused on Norway’s biggest cities, dropped to a nine-month low in Oslo after saying that buyers in Europe’s second-richest nation per capita have become “more hesitant.”
Selvaag, based in the Norwegian capital, fell as much as 4.9 percent to 17.50 kroner, the lowest intraday level since Dec. 28. The stock traded 3.8 percent lower as of 12:27 p.m., with trading at more than double the average daily volume during the last three months.
“Demand for new homes remains high, but the market is more hesitant than in the first half,” Chief Executive Officer Baard Schumann said in a statement today. “We’re experiencing relatively good demand for homes in the 2 to 4 million kroner ($333,000 to $666,000) price segment, but it’s become harder to sell more expensive residences.”
Norway, which boasts no net debt thanks to its $785 billion sovereign wealth fund, is seeking to encourage saving and curb growth in private borrowings which have climbed to records after years of low interest rates. That’s fueled asset prices in Norway, driving house prices to all-time highs and prompting warnings from regulators that the development is unsustainable.
Norway’s new government, led by Conservative leader Erna Solberg, plans to offer tax breaks to encourage consumers to set aside savings, she said after winning the Sept. 9 election.
Her government, which yesterday agreed to form a minority government with the Progress Party, will scale back caps on borrowing imposed under the Labor government of outgoing Prime Minister Jens Stoltenberg.
Norway’s FSA, the central bank and the International Monetary Fund have all sounded the alarm on risks facing the nation’s housing market after prices doubled over the past decade and household debt swelled to 200 percent of disposable incomes. Outgoing Finance Minister Sigbjoern Johnsen, who will step down this month, has fought to prevent a re-run of the early 1990s crisis that sent real estate prices down as much as 40 percent.
Selvaag sold 236 homes with a total value of 625 million kroner in the third quarter, it said today. That compares with 303 homes valued at 966 million kroner a year earlier.
House prices fell a seasonally adjusted 0.9 percent in September from a month earlier, the Norwegian Association of Real Estate Agents told reporters in Oslo today.
“It seems fair to conclude that house prices have turned and are now on a falling trend,” Nordea Bank AB economist Katrine Boye said in an e-mail. “If prices continue to drop as sharply as this, potential consequences for the economy and for Norges Bank are big.”