valuation gap is gauged empirically in the context of a cross-country panel analysis of long-run fundamental determinants of house prices using data from 20 OECD countries . A. Introduction 1. House prices in Norway have risen strongly over the past two decades . ( Figure 1 ). Norway has seen a long housing boom since the mid-1990s apart from a brief and mild downturn during the global financial crisis, with house price inflation exceeding income growth by a wide margin. While real house prices have also been up strongly during the same period in the majority of
. Given the importance of the housing market to both financial and macroeconomic stability, it is essential for policymakers to monitor the extent to which house prices deviate from economic fundamentals. This paper examines various factors driving the uptrend in house prices, with a particular focus on institutional and structural factors. The extent of a possible valuation gap and the role of structural polies in shaping house price development are gauged empirically in the context of a cross-country panel analysis of long-run fundamental determinants of house prices
Growth in Norway (Thousand persons) Sources: Statistics Norway and Fund staff calculations. Employed Persons: Immigrants and Non-Immigrants (Cumulative change in thousand persons since 2004 Q4) Sources: Ministry of Finance, Statistics Norway and Fund staff calculations. 4. The housing market has shown signs of cooling . House prices stabilized in mid-2013 although staff estimates suggest a substantial overvaluation (the average estimate is roughly 40 percent) in spite of a slight reduction in the valuation gap in 2013. A house price