'No quick fixes': Gloomy forecast for Norway's rental market
High demand and a shortage of properties has led to a tight rental market in Norway's big cities. The Local spoke to real estate experts to find out what needs to happen for the situation to change.
After two years of the coronavirus pandemic, day-to-day life in Norway is – more or less – back to normal.
While many young people and students in Norway are enjoying their reclaimed freedom of movement and lifestyle, the aftereffects of the pandemic continue to impact their lives, most notably when it comes to finding rental accommodation.
Financial newspaper Finansavisen recently reported that, at the end of June this year, there were 45 percent fewer rental properties on the market compared to 2021.
The rental market is particularly tight in big cities like Oslo and Stavanger, and properties are being rented out much faster than last year.
Are there any signs that the situation will improve in the coming months?
A demand crisis in Oslo and Stavanger
As things now stand, those looking to rent in Norway are in for a rough time.
"The demand for rental properties was lower than usual during the pandemic. At the same time, house prices in Norway rose. We believe that quite a few people used the opportunity to sell their rental homes at the time.
"After the pandemic, all the students and people working in Norway (for example, workers from Sweden and Poland, as some of them went home during the pandemic) have largely returned to the cities.
"So, demand is very high, we have a demand crisis in some areas – especially Oslo and Stavanger. However, many places in Norway don't have such a problem; it's mainly the case in big cities," real-estate industry veteran and director at Real Estate Norway Henning Lauridsen told The Local.
Fewer second homes
Carl O. Geving, Managing Director at Norway's Real Estate Association (NEF), agrees with Lauridsen. He also points out that, during the pandemic, there has been a decrease in the number of second homes in Norway – homes that are usually rented out.
"We see increasing demand in the rental market, that is correct. The market is very tight, especially in Oslo, because of the lack of possibilities to rent apartments.
"The number of second homes for rent in Oslo has decreased from 59,000 to 54,000 since 2019. So, in Oslo, it is quite difficult to find an apartment for rent – the fact that the construction of small apartments in the capital is limited, the tax framework, and the decrease in the number of investors in construction projects also make the situation worse," Geving said in a phone call with The Local.
No quick fixes
In the short term, industry experts see only dark clouds on the horizon for people looking to rent in Norway's major cities.
"It will take some time for the situation to change. The lack of housing in Oslo results from insufficient development over 15-20 years. However, in Stavanger, the situation may improve in six months or a year. Overall, it's pretty difficult at the moment; there is no easy solution," Lauridsen stated.
Geving agrees: "There are no quick fixes. With the current tax system, it's difficult for things to change fast. If we get a price correction in the buyers' market, we will likely have even fewer second homes. Norwegian authorities are trying to help to get more people to rent, but that also takes time."
Thus, the rental market squeeze in large cities seems to be here to stay.
Is there anything people looking for rental housing can do to adapt? The Director of Real Estate Norway believes people can try to look further away from where they initially wanted to rent.
"That could be a possibility. But it will be difficult," Lauridsen noted.
On the other hand, Geving thinks that buying properties together with friends – a practice common in parts of Norway – could be part of the solution.
"We can see that, in tough times, more people try to buy properties together with friends, it becomes more common.
"Still, it's challenging. Students and young people have limited capital, typically. In previous years when we had this debate, students and young people managed to get by, but the market is more crowded this year. Thus, some people will likely choose to live outside Oslo in the surrounding municipalities and travel to the capital via train or bus.
"The problem is less serious in Bergen and Trondheim, but in Oslo, it's quite tough," Geving pointed out, adding that building more student homes in the capital could also be part of the solution.