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Rent prices in Norway in steep rise during second quarter

Rental prices in Norway's four largest cities rose in the second quarter of this year, with prices up 4.2 percent overall from last year, figures from Real Estate Norway show. 

Pictured is a block of flats in Oslo.
Real Estate Norway said it saw a historically high increase in rental prices in the second quarter. Pictured is a block of flats in Oslo. Photo by Emilia Samborska on Unsplash

A sharp rise in the cost of renting in Norway was recorded in the second quarter of 2022, the latest figures from Real Estate Norway (Eiendom Norge) show. 

“Eiendom Norge’s rental housing price statistics show that there was a historically strong rise in rental housing prices in Norway in the second quarter of 2022. Stavanger and Sandnes had the strongest growth with an increase of 5.2 per cent, followed by Oslo with 3.2 per cent and Trondheim with 2.5 per cent,” Managing Director of Eiendom Norge, Henning Lauridsen, said. 

However, the cost of renting in Bergen dropped 3.1 percent in the second quarter. Despite this, rental prices had increased sharply in Bergen and the west of Norway in general overall in the past year. 

During the last 12 months, Stavanger/Sandnes and Bergen had the largest rental price increases with rises of 10.3 and 6.6 percent. Trondheim had the third largest growth with 4.6 percent, followed by Oslo with 3.6 percent. 

“We link the strong growth in rental prices in west and south-west Norway to strong growth in the Norwegian economy as a result of increased activity in the oil industry in this region. In the student city of Bergen, prices are probably also driven up because the pandemic is over and the infection control measures have been lifted,” Lauridsen explained. 

Another thing reported by Real Estate Norway was a low supply of rental homes in Norway. 

“We have never previously registered such a low supply of homes for rent on Finn.no. While the supply is relatively stable in Bergen and Trondheim, the supply has decreased a lot in Stavanger/Sandnes and Oslo. In Oslo, the supply is at a disturbingly low level, which has matched up with reports in Media,” the managing director said. 

At the end of June this year, there were 45 percent fewer rental properties on the market compared to the year before, financial newspaper Finansavisen reported last week. 

“It is a demanding time for those entering the rental market right now. There are simply too few homes on the market,” Jørgen Hellestveit, marketplace director at Finn Eiendom, told Finansavisen.

Despite the more limited selection, rental homes are also being snapped up much quicker than last year. Last year, a home was listed on the market for 13, 13 and 12 days in May, June and July before a lease was signed. In the same months this year, properties lasted 10, eight and 11 days on the market before a tenant was found, according to Finn.no. 

READ MORE: Low number of rental properties available in Norway despite huge demand

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PROPERTY

Property latest: What’s the outlook for Norway’s housing market this Autumn?

As is the case in most of Europe, Norway's housing market is currently characterized by a lot of uncertainty. However, housing prices in the country are expected to fall this Autumn due to – among other things - cyclical patterns and the effect of rising interest rates.

Property latest: What's the outlook for Norway's housing market this Autumn?

After a year of rising housing prices in Norway, the market is starting to cool off a little. According to the latest Real Estate Norway data, house prices fell by 2.2 percent in September. Adjusted for seasonal variations, prices fell by 0.6 percent.

However, it is important not to overstate the decrease, as home prices in Norway are cyclical – they’re traditionally lower in the Autumn and Winter.

While the COVID-19 pandemic has left a mark on the real estate market, most experts still agree that falling prices should be the norm in October, November, and December.

This Autumn, price developments will also be characterized by a considerable level of uncertainty as the energy, security, and inflation crises continue to grip Norway, Scandinavia, and the Old Continent.

Housing market snapshot

Wondering how many homes are sold or how many homes are put for sale on the market each month? Curious about the average price and sale time for a home in Norway at the moment?

We’ve got you covered.

In September, 9,798 homes were sold in Norway, a 5.6 percent decrease compared to the corresponding month in 2021. At the same time, 11,716 homes were listed for sale, which is 17.3 percent more than in September 2021.

Furthermore, it took an average of 29 days to sell a home last month, according to Real Estate Norway.

The September statistics show that the number of properties on the market has registered a robust increase, while home sales have leveled off.

This points to a potentially lower home price trend in the months ahead.

Interest rate hikes

The fact that price developments in September were relatively weak in virtually all parts of the country – with the exception of Ålesund and the surrounding area – could indicate that the Central Bank’s (Norges Bank) interest rate hikes are beginning to work.

There are also other signals that Norway’s economy has started taking note of the monetary tools at Norges Bank’s disposal and broader crisis-related factors.

In its Tuesday forecast, the Confederation of Norwegian Enterprise (NHO) announced that unemployment in Norway is set to increase in the months ahead as the economy continues to be affected by a shortage of goods, raw materials, and energy.

As activity levels in the Norwegian economy decline, growth in the workforce will likely level off.

The Norwegian economy is booming at the moment, but should this development reverse, it would also likely negatively affect housing prices in the short term.

Change expected in January

If prices continue to follow seasonal trends, expect to see them rise again from January due to the lack of properties on the market and as buyer interest starts growing.

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