Property For Members

What's changing for tenants and homeowners in Norway in 2023?

Frazer Norwell
Frazer Norwell - [email protected] • 28 Dec, 2022 Updated Wed 28 Dec 2022 13:44 CEST
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Here's what homeowners in Norway can expect from 2023. Pictured are homes in Norway. Photo by Nick Night on Unsplash

Falling house prices, higher interest repayments and new mortgage rules are among the changes on the cards for Norway's property market in 2023.

House prices to fall 

Many experts have predicted that house values in Norway will fall in 2023. Those in the housing market point to rising interest rates as the key reason why house prices will dip. 

Since 2021, the key interest rate has been raised from zero to 2.75 percent. Norway's central bank, Norges Bank, is widely expected to bring the key rate up to three percent in 2023. 

Nationally, home prices are expected to fall by around 3.5 percent. However, some places are expected to be worse affected. Oslo will see the most significant falls, of about six percent, according to forecasts from Real Estate Norway (Eindom Norge). 

Southern and south-western Norway will likely see more positive price developments, while Norway's other large cities may get through next year with only marginal declines in house values. 

Meanwhile, the national data agency Statistics Norway has forecast house prices to fall some eight percent between the third quarter of 2022 and the same period next year. 

Increased demand in the rental market

Henning Lauridsen, CEO of Real Estate Norway, has said that a growing population and increased immigration would lead to higher demand in the rental market. 

"It will be able to generate a large demand for housing, first in the rental market. Eventually, this will spill over into the owner-occupied and housing markets," he told public broadcaster NRK. 

This increase in the population that has been forecast would also act as a buffer to ensure house prices don't fall too far. 

Rent prices to rise

Unfortunately for tenants, rents in Norway will likely rise further next year. The reason for this will be increased immigration and the number of second homes (often rented out by landlords) falling. 

"As a result of expected labour immigration and more refugees from Ukraine, we expect increased demand in the rental market in 2023. When the number of secondary homes continues to fall, the under-coverage of rental homes in Oslo will become increasingly critical. In light of the development, we expect rental prices to be pushed up," CEO of the Norwegian Estate Agent's Association, Carl O Geving, said in a press release.

Changes to mortgage rules

From next year, the rules that govern whether a mortgage will be granted will change slightly. Under current regulations, banks must assess whether mortgage applicants can weather interest rate increases of up to five percentage points. 

However, from 2023, banks will instead use interest rate increases of three percentage points as the benchmark for whether an applicant can afford the house loan or not. 

The change of rules has been welcomed by the Norwegian real estate market, as experts think the change will allow more people to get on the property ladder. 

Wealth tax changes to affect landlords and second homeowners

The valuation of secondary homes when the wealth tax is applied will be increased from 95 percent to 100 percent. 

Those with more than 1.7 million kroner in wealth and assets in Norway must pay wealth tax at a rate beginning at 0.7 percent of a person's total net worth. 

Interest rates to peak

During 2022, interest rates have increased more than fivefold, from 0.5 percent to 2.75 percent. 

Luckily for homeowners, interest rates and, thus, loan and mortgage repayments are likely to peak by mid-2023. 

Norway's central bank, Norges Bank, has been aggressively raising the interest rate in Norway to try and slow inflation. 

It has set a provisional target of three percent for the key policy interest rate. This means homeowners should expect just one more increase of 0.25 percentage points in 2023. 

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Frazer Norwell 2022/12/28 13:44

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