Is it better to buy or rent property in Norway?
The hunt for a new place to live in Norway can be stressful especially if you have to make the big decision of whether to rent or buy the property. Here is what you should know if you are currently wrestling over that very question.
What to expect when renting
The type of housing you can rent in Norway is varied. Everything from single family homes to attached converted garages. In the major cities, flats are the preferred housing choice and generally, the more central in a city you are looking to live, the higher the price tag.
If you are looking to rent a place in a more rural area of Norway then you will most likely be renting and dealing directly with the properties' owners and not a real estate agent.
And even though renting often requires less of a commitment, it doesn’t mean you are guaranteed to find a place in your desired location and time. Lars Aasen, manager for the association for renters told ABC Nyheter that it can be difficult to find a place if you are first entering the rental market in Norway.
“The rental market is a market for students, people who want to rent temporarily and those who are disadvantaged and low-paid. These groups clearly notice the high rental prices,” he says. Adding, “We also see that there are many adults who have to move together in shared housing due to the high rental prices.”
And speaking of the prices
If you’re not committed to a specific area in the country yet, it could influence your decision to know that the three most budget friendly cities to rent a house in Norway are Harstad, Skien, og Hønefoss. One the other end of the cost spectrum lies Oslo, Trondheim, and Bærum. These three are also rated as the most expensive cities to rent a flat in as well.
If you are flexible on where you settle then there is some real money to be saved in renting costs. For example, if you rented a 120 square meter house in the Northern city of Harstad, you would pay an average of 9,855 kroner (981 euros) per month. That is less than half the price of the average 21,088 kroner (2099 euros) monthly rental cost you would pay for a place in Oslo.
On average, the cost of renting in Norway is 9,250 kroner (921 euros) per month. This excludes Oslo which has its own average cost of 12,250 kroner (1220 euros) per month.
The Renting process
Visninger or viewings, are typically a public event. You can request a private viewing but are not guaranteed one. Each viewing is open for visitations for around two hours. They can be very crowded and difficult to get an accurate view of the housing. Note that during the on-going pandemic, regulations apply to how many people are allowed in a showing at one time. And the time limit for how long you can stay is shorter than usual.
In Norway’s larger cities, the rental market is fast paced. So if you have your eye on something that you can see yourself living in then don’t hesitate to act. Go to the showing, contact the seller or agent and convey your interest as soon as possible. When advertisements for a new property are first published, the showing typically happens five to seven days from the publishing date and the bidding round happens the day after the final showing.
What do I need to rent?
The documents you will need in order to rent will vary according to where you are renting, your budget, and if you are dealing with an agent or with the property owner directly.
You will most likely need to have an official source of identification such as your passport. Generally your deposit will be the value of three months rent. This as well as your first month’s rent will be necessary to have up front. You may be asked for pay stubs from your work or an official contract of employment. The flat owner might also request a guarantor in some cases.
A few things to keep in mind if you choose to rent
Check the contract to find out if there is a charge for breaking the lease early, and for how much notice you need to give before vacating the rental.
Note any signs of damage and let the owner of the place know right so it cannot be blamed on you when you decide to leave
What about buying prices?
And now onto the more concrete commitment of buying. Buying is generally preferred over renting in Norway, and the Norwegian culture encourages real estate ownership from an early age.
The times between Easter and summer holiday are usually the most active times in the housing market in Norway. If your plan was to wait it out until quieter times, it might not be the most financially sound option. Norway has been and continues to be experiencing a substantially high increase and demand in housing. From this time last year, the prices of property increased a sizeable 12.5 percent.
“We expect the turnover volume to continue to be high going forward, as there has been strong growth in the number of new homes on the market in the last month,” said Henning Lauridsen, the administrative director of Eiendom Norge, a trade association for real estate companies.
The average price spent on property in Norway is 2,6 million kroner (259,000 euros)
Again, Oslo boasts its own rate with 3,7 million kroner (369,000 euros) as the average price tag of a piece of property.
In recent years, cities around the country's capital such as Ski, Ås, and Drammen have become popular with home buyers who work in Oslo.
“These are places you can stay when commuting to Oslo," CEO Grethe Meier of real estate agent PrivatMegleren told TV2.
"Many people work in Oslo, but cannot afford to live very close by. These areas have developed a lot in recent years, and with better infrastructure they are becoming increasingly attractive,” she says.
The buying process
Know your budget or bidding limit (because there is often a bidding round). It would also be smart to check how much homes have recently sold for in your desired areas.
If you are going to buy a home in Norway, you must obtain a financing certificate from a bank before you start looking at a home. When applying for a loan to buy a home from the bank you are expected to have your tax assessment and salary slips available to prove your level of income. Another requirement is that you must pay 15 percent of the purchase price from your own capital to get a loan.
Like renting, houses for sale are often promoted through showings. A hard copy of the the salgsreport or the “sales report” of the home's information is generally available for anyone to take at public showings. You will find important information in the sales report such as what needs to be fixed and what has recently been upgraded. So read it and it’s fine print carefully before making a decision to buy.
Tips to keep in mind
Location is key.
“See the potential of a home. Location is more important. You can not do anything with it, while a home can be changed,” Wenche Odden Kvamme department leader at Eiendomsmegler 1 in the North of Norway told NRK.
If you are wanting to buy less for investment purposes and more to put down roots, then make contact with some of your future neighbours so you get a better idea of the area and people living there.
“By checking out the neighbourhood, you can also find out if you are going to share the stairs and entryway with rental properties or people who have Airbnb apartments,” Hans Christian Espenes, a real estate agent in Trondheim told NRK.
Your best bet could be to purchase a nybygg
The private development sector in Norway is booming and many house-hunting residents both young and old are choosing to purchase property that has yet to be built. If you have the time and are in no rush to move then this could be your best bet.. Advantages of a nybgg or “new build” is that the value of the property you have purchased often increases even before moving day. Newer homes and flats often have lower operating costs. And you often have the ability to make the changes you want in building materials and sometimes layout if you purchase the real estate before construction starts.
So what would be cheaper?
If making the decision on whether to rent or buy is based solely on upfront costs, then renting would be the most budget friendly option. The deposit and first month's rent needed for renting is likely far less than the 15 percent of saved capital needed to apply for a home loan.
Renting may also be the cheapest option if you are unsure of your future plans and need to remain flexible. Sure, renting eliminates the chance of seeing any profit on your home in the future, but you are also not subject to any additional costs. In addition to the more upfront costs of home ownership, there are also the less discussed pricey additions of furnishing, maintenance, and unforeseen immediate repairs, on top of a monthly mortgage.
One the other hand, if you do have the chance to buy, now would be a good time as interest rates for home loans are currently low at 1.77 percent in Norway.
Buying may also be the more affordable choice in the long run if you plan on staying in the home or flat for a few years or more. Housing prices in this country are currently on the rise which means the property you buy now could likely be worth more in value in the future. In other words, you may get your money back plus some if you eventually choose to sell.
But the choice between renting or buying obviously comes down to the individual. Timing, budget, and location are all factors to consider when weighing the best financial choice for your situation. In addition to the factors listed above, more research on housing history and prices in the area you chose to live is key to finding out what will save you money in the long run.
Useful Vocabulary and facts
- About 560,000 Norwegian households live in rented housing in Norway
- In 2020 the average price per square meter for apartments in Oslo was 83,181 kroner
- The area in Norway with the lowest priced homes is up north in Finnmark.
selvangivelse - tax assessment
bolig konto- house account
gjennomsnittspris - average price