(MENAFN) Official data showed that Norwegian real estate prices have swelled to new record highs in July, while household credit growth accelerated, increasing worries over a housing bubble, Reuters reported.
Housing prices grew by 8.1 percent in July compared to a year earlier, while household credit grew by 7.2 percent.
The International Monetary Fund (IMF) said that Norwegian house prices could be up to 20 percent overvalued, creating the biggest risk for the country.
The data also showed that accelerating immigration, shortage in home construction and a booming oil sector, are all contributing in the bubble.
The central bank recently hinted that it would keep interest rates unchanged until the end of the year and the first hike would likely come either in December or the first half of 2013.
Norway has no debt, no budget deficit, unemployment is very low at 3 percent, and its economy grew by an annual 5 percent in the second quarter, easily outpacing the European Union, which contracted during the same period.
The central bank has been hoping that tight lending standards would help rein in housing price growth and economists expect some moderation over the rest of the year.
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