The Norwegian housing market : will house prices in Akershus and east and west of Oslo respond differently to financial variables?

Abstract

The Housing market in Oslo and Akershus areas experience some of the most expensive house prices in Norway. But within the neighbourhoods and regions there are local differences in prices. The first and main part of the paper examines how financial and economic variables affect house prices in the different areas in Oslo and Akershus by using regression analysis. Since house price levels are varying, there should be a reason to believe that the different areas respond differently to changes in income, net wealth, unemployment, interest rate and GDP. The second part of the paper investigates the relationship between house prices and consumption. By using Granger Causality test we investigate if house prices in each local area are a significant driver on private consumption. Since housing wealth describes much of peoples total wealth, housing wealth might specify how people allocate their assets. This can indicate that changes in house prices will cause changes in private consumption.