The Norwegian Housing Market: An Econometric Analysis with Regional Data

• Main Author: Tjønneland, Bård Ola
• Format: Master Thesis
• Language: English
• Published: 2014
• Subjects: housing; market; prices; debt; financial; stability; bubble; regional; analysis; cointegration; ecm; Norway; Northern Norway
• Online Access: http://hdl.handle.net/10852/40983; http://urn.nb.no/URN:NBN:no-45606

Norwegian housing prices have skyrocketed over the last two decades, with aggregate housing prices having soared upwards almost 400 percent since 1993. Based on an aggregate housing price model provided by Anundsen and Jansen (2013b), this thesis explores unchartered territory by incorporating regional data on housing prices and debt so as to capture and explain regional housing market developments. The data is aggregated into three regions, Oslo & Akershus, the South-West, and Northern Norway, over the period 1994Q – 2012Q4. This period allows for a study of how the regional markets fared in the face of the turmoil associated with the financial crisis of 2008. The regional housing price model suggests that the housing markets in the various regions are remarkably synchronized with few regional differences. Due to the existence of an error correction term in the housing price relation, it seems that housing prices are in line with fundamentals. The results are supported by the robustness of the model and the significant test statistics. Moreover, the results suggest that the aggregate model does a good job in explaining regional trends in the housing markets. The thesis also manages to establish a strong linkage between housing prices and debt.