February 5, 2018 / 10:24 AM / 4 months ago

UPDATE 2-Norway's housing prices fall further, sales volumes rise

* Housing prices down 0.4 pct S/A in Jan vs Dec

* Prices down 2.2 pct yr/yr

* Sales rise points to market stabilising

* Currency has also robounded from housing-related weakness (Releads, adds analysts, bullets, background)

By Camilla Knudsen

OSLO, Feb 5 (Reuters) - Norwegian housing prices fell in January, continuing a trend that has weakened the country’s currency, although a rebound in sales volumes point to the market stabilising in the near term.

Seasonally adjusted housing prices fell by 0.4 percent in January from December, resulting in a year-on-year decline of 2.2 percent, data released on Monday by industry association Real Estate Norway showed.

Tighter mortgage regulations, lower population growth and a boom in construction have all contributed to a fall in prices from a peak in March of 2017.

But as prices continued to drop, the number of units sold in January rose by 8.4 percent from the same month of 2017, pointing to a rebound in demand, Real Estate Norway said.

“Combined with a decline in the number of homes for sale, this gives reason to believe that the price decline is about to level off,” it added.

Norway’s crown currency hit a 10-year low against the euro in December as housing prices in Norway, as well as those of neighbouring Sweden, caused fears among investors of deeper economic problems.

Recent economic data has pointed to a stronger Norwegian economy, however, and the crown has risen by about 4 percent against the euro in the past six weeks.

Analysts agreed the housing market weakness may soon be a thing of the past.

“The inventory/sales ratio ... suggests the housing market is about to stabilise without causing any significant damage to the economy,” brokerage Danske Bank tweeted.

Nordea Markets said the January data made it more certain that the decline in prices will soon be arrested, adding that the numbers were well in line with central bank forecasts.

Unadjusted prices rose by 2.0 percent in January from December. The housing data was compiled by Real Estate Norway, FINN and Eiendomsverdi. (Writing by Terje Solsvik; Editing by Gwladys Fouche and Alison Williams)

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