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EXPLAINED: What do Norway’s rising house prices mean for you?

Even a pandemic hasn't been able to stop property prices from soaring in Norway over the past year, but why are they rising, and how long will they continue to rise for? Here's what you need to know.

EXPLAINED: What do Norway's rising house prices mean for you?
Will prices continue to rise going forward or will they plummet? Photo: Seth kane on Unsplash

Property prices in Norway have risen 12.5 percent nationally compared to the same time last year, according to new figures from Statistics Norway

In addition to this, prices rose 2.7 percent from the first to the second quarter of 2021, with values increasing in every county in Norway. 

The average price of a property in Norway in June was just shy of 4.4 million kroner (approximately $505,000) according to numbers from Real Estate Norway, the national association for estate agents in the country.

PROPERTY IN NORWAY: What to expect if you’re buying a home in Oslo

Where have house prices been rising? 

Compared to last year, house prices have grown strongly across the board. The most robust growth was in Vestfold, Telemark and Viken, where prices rose by 15 percent. The slowest growth was in Møre and Romsdal and Vestland if you exclude house price rises in Bergen; houses still rose by just under ten percent in those areas. 

Detached and semi-detached houses grew in value the most while prices for apartment blocks grew the slowest. 

What’s causing house prices to rise?  

The rise in housing prices has primarily been driven by low interest rates.

Norges Bank, Norway’s central bank, slashed interest rates to zero last in May last year due to the coronavirus pandemic. 

“Most of the price increases over the past year can be attributed to the interest rate effect,” Røed Larsen from Housing Lab, a property think-tank, told online news site Nettavisen

Lower interest rates mean more people are willing to borrow money to make big purchases such as houses, leading to a massive surge in demand across Norway. 

Houses are selling in record amounts and the average time a house spends on the market in Norway before being bought is just 29 days as of June 2021.  

According to Norges Bank, interest rates aren’t the only thing driving demand; pandemic restrictions have left people itching to splash out on a place of their own. 

“Increased use of home offices and limited consumer opportunities to spend disposable income has probably also increased demand,” the bank said in its monthly report for June

How long will prices continue to rise? 

Experts have said that house prices are unlikely to continue to skyrocket as they have done over the past year and are instead facing a “headwind” in the form of higher interest rates on the horizon and stricter credit regulation. 

“The strong rise in house prices is facing headwinds in the form of higher interest rates, stricter credit regulation and high construction activity in several places,” Christian Fengstad Bjerknes of the Co-operative Housing Federation of Norway (NBBL) said in June.

“We are likely to have a period of moderate price development. However, it is not unlikely that prices will fall over the autumn, as they typically did before the pandemic,” Real Estate Norway’s managing director Hennig Lauridsen had previously predicted when speaking to financial site E24.

Lauridsen believes that the pandemic will continue to have a long-lasting effect on the demand for housing in Norway. 

“We believe that the strong demand for housing in Norway will persist and that the pandemic has led to a lasting shift in the housing market,” he said. 

Looking ahead to 2022, there’s plenty of uncertainty over the future of house prices as Minister of Housing Nikolai Astrup has laid down new rules that will regulate housing valuations in Norway. 

The new regulations are set to come into effect on January 1st 2022, unless they are scrapped by the current government or a new coalition government after September’s general election. 

“This new legislation would regulate over 100,000 transactions in the housing market and will have major consequences for Norwegian consumers with increased costs, increased risk and increases insecurity if the legislation isn’t properly done,” Lauridsen said. 

What will the changes to interest rates and regulation of property valuation mean for you? 

In short, this is good news for those looking to buy or get on the property ladder but bad news for those looking to sell over the next couple of years. This is because higher interest rates will gradually bring house prices down. 

“We expect a better balance between supply and demand with a shift from a seller to a buyers’ market. This (interest rate rising) will provide a more sustainable housing market in the time to come,” CEO of the Norwegian Real Estate Association Carl Geving said in the associations latest monthly report

READ ALSO: Is it better to buy or rent property in Norway?

Interest rate price rises could also hit the pockets of those who have recently bought a property with a flexible rate mortgage, as interest rates are expected to rise 1.5 percent by the end of 2022. 

Furthermore, if the new regulations on property valuation do come into force then those selling their house may get less than they were expecting depending on how well the rules are implemented. 

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For members


Key mistakes to avoid when bidding on a house in Norway 

Norway's house bidding process is equally stressful and confusing, but before putting in an offer, you should make sure you aren't making any of these costly mistakes. 

Key mistakes to avoid when bidding on a house in Norway 

Buying a house is normally stressful enough, whether it’s getting a mortgage in place, going to dozens of viewings or spending hours going through listings. 

In Norway, the process is further complicated by the house bidding process, which you will have to go through when buying most properties today.

Additionally, you could make several mistakes that could make the process harder or cost you dearly. 


Not having financing in place

Before you can bid on a property, you need to visit the bank to ensure financing for your purchase. If you are taking out a mortgage on the house, you will need to make sure you know the set limit the bank will allow to borrow. 

When you make a bid, the estate agent will contact the bank to ensure that you have the financial arrangements. If you do not have enough money or the mortgage your bank agreed on doesn’t cover the cost, your bid will be rebuffed. 

Therefore it is crucial to know your financial limits when entering bidding rounds to avoid any disappointments. 

Making a bid on a house you aren’t sure about

You should be absolutely sure that you could see yourself living in a property when you bid on it. This is because bids in Norway are legally binding, meaning that even if you put in a speculative bid and it’s accepted, you won’t be able to back out.

This means that you should avoid putting in any offers on homes you aren’t 100 percent sure about.

So while you may be in a rush to get on the property ladder or take a step up, patience will prevail over diving in headfirst. 

Forgetting to do proper research

The devil is always in the detail, and as dull as it may be, you should always read the small print to avoid any nasty shocks. 

This is especially important when buying apartments in Oslo and other cities where you will likely encounter housing associations where residents will be expected to pay various fees or contribute to the upkeep of the block. 

“For instance, if they are planning to replace the roof of the block the next year, you will read about it in the sales documents. It is important to consider whether you can afford a property also after potential add-ons,” Trine Dahl-Pettersen, real estate agent at Eindom 1, explained to The Local

Reading the small print isn’t the only place where research pays off. For example, one reader who has bought a house in Norway pointed out that finding a place that needs a little bit of work can help you avoid intense bidding wars, and locals tend to want a ready-made home to move into. 

“Finding a property that won’t go sky high over the asking price when bidding can be challenging. However, I quickly noticed that Norwegians are not afraid to bid high for a ready-to-go home,” Scott told The Local of his experiences buying in Bergen. 

“If you are comfortable doing some work on it, you can find a much better deal, maybe even under the asking price,” he added.

Therefore, market research can help prevent you from paying over the odds. 

Making more than one bid at a time

Unfortunately, putting plenty of bids out and seeing which offers stick could be a lot more disastrous than you may think. 

As mentioned earlier, bids in Norway are legally binding. Meaning that if you have two bids accepted at the same time, you will be legally obligated to purchase both of them.

Not having BankID

Despite the bidding process being done over the phone, there are still some hoops to jump through. 

You’ll need to have a Norwegian Bank ID available for the bidding process, as it is needed to confirm your identity when sending your bids. 

Without this, you won’t be able to lodge any offers. 

In addition to bank ID, you will need a Norwegian identification number (D-number/Personnummer) to hand.