“That’s our hope, but where that house would be located is another question,” Borg said.
The high indebtedness of home owners makes them more vulnerable to any future rise in the interest rate.
“While household debt is at an all time high, interest costs are nearly at an all time low,” said Shakeb Syed, chief economist at Norwegian stock broker Sparebank1 Markets.
On Wednesday, credit rating institue Moody’s warned that Norwegian banks “are sensitive” to the housing market.
On the other side of the border, minutes from the latest meeting of the Swedish central bank show that four of its six policymakers were concerned with the level of household debt.
REAL ESTATE CRASH
However, few believe the countries will see the type of real estate crash that in recent years has hit countries like Ireland, Spain and the US. Healthy government finances and low unemployment rates, especially in Norway, are underpinning the market.
Both countries also lack a crucial ingredient of most housing bubbles: An increase in the number of homes being built. For more than a decade, the supply of new housing in Norway and Sweden has trailed that of other European countries.
Critics point to onerous planning laws, high construction costs and a failure to invest in infrastructure in urban growth areas.
“Prices have risen the most in city centers. I think it would have been a good idea to expand the transportation network around the big cities,” Syed said.