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Is too much red tape behind a housing shortage in Oslo?

Robin-Ivan Capar
Robin-Ivan Capar - [email protected] • 2 Nov, 2022 Updated Wed 2 Nov 2022 12:50 CEST
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Oslo is currently facing a demand crisis when it comes to housing. Photo by Angel Luciano / Unsplash

Norway's capital is facing a severe housing shortage. While several factors are contributing to the issue, excessive red tape is being singled out as a particularly persistent problem by experts.

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The lack of housing in Oslo results from insufficient construction developments over 15-20 years. Most experts agree that there are no quick fixes to the problem, which is characterized by several factors.

In recent months, real estate industry veterans have warned that too much bureaucracy is also hampering new development.

According to the newspaper DN, the time it takes until a planned residential area is given approval by the Agency for Planning and Building Services has been highlighted as a key contributor to Oslo's housing shortage.

This year, the consultancy Prognosesenteret AS has calculated that the number of new homes will only cover half of the need in the capital.

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Bureaucratic bottleneck

After getting substantial criticism from the public and a municipal audit in recent years, Oslo's Agency for Planning and Building Services has announced it would make the process more efficient.

It has failed in doing so. After years of streamlining attempts, case processing now takes twice as long, according to DN.

Two different directors have managed the agency during the past five years - and both have rolled out different measures aimed at tackling the issue.

In the said period, the time spent on planning work has doubled. In 2017, it took an average of 928 days until planning proposals were given a final municipal decision, corresponding to two and a half years. Now, planning cases take an average of 2,048 days, i.e., just over five and a half years.

The current agency chief, Kari Andreassen, admits that things aren't moving in the right direction.

"We are not satisfied that it (note: the case processing) takes so long," she said, adding that the increase in case processing times is due to limited space in the capital, as well as higher ambitions for "housing quality, climate standards, and participation from other agencies."

"We want to make room for even more people in areas with limited space," Andreassen says.

The agency is also struggling to meet legal deadlines for building applications.

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Lack of housing drives up rental and property prices

By the end of 2022, roughly 1,850 new homes will be put up for sale in Oslo - almost 1,200 homes fewer than what is needed to meet annual demand, according to Andreas Martinussen, CEO of one of the Nordic region's leading property developers, Nordr.

Rising material prices, supply chain issues, the war in Europe, and interest rate increases are all negatively affecting housing projects.

However, according to the housebuilders' association Boligprodukterene, housing development in Oslo is also significantly slowed down by today's lengthy planning and regulatory processes.

In addition, several new construction restrictions have been put in place in parts of the capital.

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As the leader of Real Estate Norway, Henning Lauridsen, told The Local in a recent phone call, Oslo is currently facing a demand crisis when it comes to housing. Real-estate industry veteran and Real Estate Association (NEF) chief Carl O. Geving agrees.

He notes that the aforementioned problems in the capital – as well as the effects of the pandemic – have led to a demanding situation both for people looking to rent and those looking to buy a property in Oslo.

"We also 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.

READ MORE: Will Autumn be the best time to buy property in Norway?

"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 told The Local in late July.

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Robin-Ivan Capar 2022/11/02 12:50

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