Norway's housing boom is showing signs it may be about to turn into a decline after real estate prices fell in some parts of the country. Home prices fell in the third quarter in areas around the nation's biggest west coast cities, including the oil hub Stavanger and Bergen, while prices for detached houses slid 0.1 per cent nationwide, according to an October 12 report from Statistics Norway. Moody's Investors Service said last week that Norway's household income levels did not support the price level in the market and warned of an "elevated" risk of falling values. Homeowners in some areas are seeing losses in the market values of their properties, as the central bank signals it is gearing up to possibly start raising interest rates in December. The housing market now faces the twin threats of increased supply and monetary tightening that will raise the cost of holding a mortgage. House price declines would reverse what economists, including Yale University's Robert Shiller, have warned was a bubble threatening to disrupt Norway's economy. Prices on apartments, single homes and row-houses have surged 30 per cent since 2008, as the global financial crisis and Europe's debt woes drove down interest rates even as Norway's economy enjoyed a boom in offshore oil investments. Housing declines could become self-fulfilling if homeowners lost confidence in the market, Bjoern Wilhelmsen, a strategist at Swedbank First Securities in Oslo, said. "The main trigger would be a macroeconomic downturn, leading to expectations of lower house prices that could, in turn, have repercussions on growth and the labour market," Wilhelmsen said. That would "reinforce a decline in prices", he said. A rising housing supply may also weigh on real estate values. A report issued by the statistics agency on September 28 showed 10,172 new dwellings were given building starts from May to August, up 30 per cent from the year-earlier period. That was the fastest building pace since 2004, the agency said. To help ease froth in the market, Norway's Financial Supervisory Authority last year set new guidelines to cap loans at 85 per cent of a property's value. The watchdog yesterday issued a report on the state of the housing market and how the new limits have been adhered to. A report from the statistics agency released on October 12 showed prices rose 0.6 per cent in the third quarter and 7 per cent from a year earlier. Prices in Oslo gained 9.1 per cent on an annual basis.