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Why the cost of renting in Norway will continue rising sharply

Frazer Norwell
Frazer Norwell - [email protected]
Why the cost of renting in Norway will continue rising sharply
Large increases in rent prices will likely continue in Norway. Pictured are the back streets of Stavanger. Photo by Caitlin Wynne on Unsplash

Rents in Norway have already increased more than inflation in Norway this year. Surging rent prices will likely continue in the coming months and years.

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The cost of renting in Norway has increased significantly over the past year. Figures from the rental platform Husleie show that rents have increased by 7.4 nationally. Inflation in Norway is currently 6.4 percent.

Jørgen Hellestveit, from Finn.no's property section of Finn.no, told the newspaper Dagens Næringsliv that the cost of renting in Oslo has increased by 25.5 percent over the past four years. An apartment in Oslo will, on average, cost 18,700 kroner in rent per month, according to Hellesveit.

Falling supply meets rising demand

One of the reasons why rent is going up is reduced supply. Finn.no, the most popular site in the country for property listings, has said that it has seen a 15.4 percent decrease in the number of adverts for rental properties.

A change to tax rules on second homes and increased interest rates, energy prices, and inflation have increased costs for landlords.

Those with more than one house have been required to pay more wealth and property tax in recent years. Increased interest rates have made mortgage repayments more expensive, increasing overheads for landlords.

The fall in supply has been meet with a sharp increase in the number of tenants looking for rental properties.

Demand for properties is expected to surge throughout July and August as students begin looking for places to live while studying.  Anne Rita Andal from the Tenants' Association told DN that they were expecting demand to "explode".

Public broadcaster NRK recently reported record-long queues for student accommodation in Oslo.

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The long waiting lists to get into student halls mean many will be forced into the private market to find a place to live.

Another factor contributing to reduced supply is the number of long-term rental contracts that have been entered into due to the war in Ukraine.

"Many refugees have come to Norway, among other things, due to the war in Ukraine. They need a place to live. I would assume that the families who have come to the country have entered into longer rental contracts than students do," Hellesveit told DN.

High prices are the new normal and "explosive rises" expected 

Geir Skogheim from Utleiemegleren told the newspaper E24 that the increased demand and low supply would lead to a surge in rent prices.

"There are many people entering the rental market at the same time. With the low supply, that is, it will mean that there will be an explosive growth in rental prices," he said.

Skogheim added that there were no indications that the situation would improve anytime soon and that high prices would continue to persist beyond the summer.

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"The price level we see now is the new normal," he said.

In the longer term, Stian Carlsen, CEO of the rental agency Utleiemegleren, has told DN that a two-room apartment in Oslo could cost over 30,000 kroner per month in five years.

The government is aiming to increase supply

Grete Wold, an MP for the oppositional Socialist Left Party (SV), told E24 that the current market conditions would persist while the market remains unregulated. Wold proposed that a rent cap be introduced and for the rental market to be better regulated.

The Norwegian government has already rejected a similar proposal from the Red Party (Rødt) on a rental cap.

Housing policy spokesperson Siri Gåsemyr Staalesen said the government's priority is increasing supply.

"There must be a good supply of rental housing. Rather, we want to increase the rate of construction of student housing. It will be a good way to reduce the pressure in the rental market. The answer is to increase the offer in the rental market. The government provides grants for, among other things, the renovation of rental housing so that the municipalities can more easily settle refugees who will come in the future," she said.

She added that the government had set up a committee to look at how conditions in the rental market could be improved.

However, Staalesen didn't point to any specific measures that would be introduced in the future to help improve market conditions.

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