Norway's red hot real estate starts to cool

Norway has experienced more than two decades of growth in its residential housing sector – but is the real estate bubble about to burst?

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Bob Strong/Reuters/File
A row of wooden houses are reflected in the still waters of a fjord in western Norway October 6, 2007.

Norway’s residential housing sector is cooling after more than two decades of strong growth, interrupted by only a slight dip in 2008. High personal debt levels and hand-wringing over a potential bursting of a real estate bubble have Oslo taking some cautious corrective steps.

In the short term, the changes are contributing to modest price declines and an end to the heyday of bidding wars and one-day sales. But the logic of real estate investment in Norway remains compelling, says The Christian Science Monitor's Oslo-based correspondent, who is not expecting a crash with long-term effects.

“Everybody sees there is going to be a correction, it’s unsustainable,” says our correspondent. But “it’s just a correction in the market and a slower growth. Long term, I think it’s still going to be a very stable investment.”

Not everyone is so sanguine. Looking at the broader Scandinavian picture, American economist Paul Krugman is sounding the alarm about high consumer debt loads in the region. Expensive housing is a big part of those debts, and that has him concerned.... For the rest of the story, continue reading at our new business publication Monitor Frontier Markets.

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