October 5, 2016 / 11:46 AM / 3 years ago

UPDATE 1-Norway housing prices accelerate, further rise seen

* S/A adjusted prices up 0.9 pct in September, up 10 pct Y/Y

* Real estate brokers expect prices to rise further in Q4

* Big regional differences; Oslo region pulls ahead

* DNB Markets: Prices support unchanged interest rate in December (Adds quotes, reaction, background)

OSLO, Oct 5 (Reuters) - Norwegian seasonally adjusted housing prices rose by 0.9 percent in September compared to August, a real estate industry association said on Wednesday.

On a year-on-year basis, prices rose by 10 percent in September, Real Estate Norway said.

Unadjusted prices fell by 0.1 percent in September from August.

“This is the seventh consecutive month with a strong seasonally adjusted rise in prices. It’s obviously a strong trend,” Chief Executive Christian Dreyer of Real Estate Norway told a news conference.

“We expect the 12-month growth to rise further in the fourth quarter, driven by developments in Oslo and the surrounding region,” he added.

Fewer houses for sale and growth in the population combined to drive up prices in Oslo by 18.5 percent year-on-year.

“There are 12 percent fewer houses for sale in September compared with September last year,” Dreyer said.

By contrast, prices were declining in the heavily oil-dependent Stavanger region, after crude prices have dropped from $114 per barrel in 2014 to the current $51.7.

In other parts of Norway, outside of Oslo and Stavanger, price growth was moderate, Dreyer said, adding that a recent proposal by the country’s bank regulator to tighten capital requirements was the wrong approach.

“There’s no point in tightening credit practises, because it’s the supply side that’s the problem,” Dreyer said.

The central bank has also expressed concerns over the rapid house price growth, and said this was among the reasons it kept its key policy rate on hold in September, rather than cut as it had previously said it would.

Brokerage DNB Markets said low interest rates had been among the key drivers of the surge in housing prices.

“We expect the key policy rate to be kept unchanged in December in line with further improvement in Norwegian key figures. Today’s house price figures support this expectation,” DNB Markets said.

The Norwegian economy is still fragile however, so the central bank won’t hike rates any time soon, DNB Markets predicted.

The house prices were compiled by Real Estate Norway, FINN and Eiendomsverdi. (Reporting by Ole Petter Skonnord, editing by Terje Solsvik)

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