* House prices rose 7.7 pct in 2012
* Bank capital rule change may limit gains to 4-6 pct this year
* Property bubble could still develop, says real estate body
* Central Bank has flagged rate hike despite soaring crown (Adds detail)
OSLO, Jan 2 (Reuters) - Norway’s hot housing market will likely cool slightly this year, reined in by policy changes after high demand pushed prices to record highs in 2012, two industry associations said on Wednesday.
House prices could rise between 4 and 6 percent this year after a 7.7 percent increase in 2012 as new rules on bank loan reserves impact mortgage lending, Norwegian realtor association NEF and real estate agency body EFF said.
“Underlying market conditions would warrant an increase of 8-10 percent in 2013 but we expect that measures from the government will lead to higher mortgage (loan) rates and thus lower property price growth,” Leif Laugen, the deputy head of EFF told a news conference.
Norway’s real estate market has been fuelled by high immigration and a booming economy that has made its central bank reluctant to raise borrowing costs, putting much of the onus on the government to cool prices.
In 2012 it cut the maximum loan-to-value rate on new housing loans to 85 percent from 90 percent, and it has asked the banking regulator to set bigger minimum capital buffers sometime this year on lenders’ mortgage accounts.
Although the construction sector is running close to capacity, the central bank estimates 10,000 fewer homes were built in each of the past three years than the market would have supported.
“High activity, strong confidence indicators and low interest rates have resulted in great demand and pressure on housing prices,” Laugen said.
Prices and household debt levels have gone so high that several institutions, including the IMF and the OECD, have warned Norway was at risk of developing a housing bubble.
“These factors could indeed result in a bubble in the future but I‘m not saying we have a bubble right now,” Laugen said.
A rise in base interest rate - currently at 1.5 percent - would also cool the property market, but the central bank’s hand has until now been stayed by a Norwegian crown trading near all-time highs against the euro and that would strengthen further if rates rose.
That picture may change in coming months with Norges Bank having flagged a hike possibly as soon as March, suggesting it is prepared to accept a soaring currency to cool an economy that could expand by close to 3 percent this year while much of the rest of Europe flirts with recession.
Norway’s population grew by 1.4 percent last year, primarily due to rapid immigration, as the oil-fed economic boom soaked up extra workers.
The country’s top commercial banks include DNB, Danske Bank, Handelsbanken, Nordea , SEB and Swedbank. (Reporting by Camilla Knudsen; Writing by Balazs Koranyi; Editing by John Stonestreet)