Bubble Index

Housing Lab’s most recent estimates suggest that Norwegian real house prices were near equilibrium, and the gap between actual and fundamental prices was only 0.05 percent in 2022Q3 (see Figure 1).  This is down from 3 percent in 2022Q2 and 14 percent in 2022Q1. Part of the reason for the narrowing of the gap since 2022Q1 is that actual house prices have started to flatten out. Another reason is the high inflation, which brings the real interest rate down, thereby increasing fundamental prices.

Figure 1

About the index

Housing Lab estimates fundamental house prices for Norway and compare them to the evolution of actual house prices. Fundamental house prices are determined by real per capita income, real after tax interest rates, and the housing stock per capita. Our estimates of fundamental prices are updated and published on a quarterly basis. Due to lags in the construction of the National Accounts data used to estimate fundamental prices, our estimates lag by one quarter. The underlying methodology is  based on published research and is documented in Anundsen (2019).