Advertisement

Property For Members

What’s the current state of the Norwegian housing market?

Frazer Norwell
Frazer Norwell - [email protected]
What’s the current state of the Norwegian housing market?
Norway's property market has performed much better than expected this year. Pictured is a view of houses in Kampen in Oslo. Photo by Marek Lumi on Unsplash

Despite higher interest rates, house prices in Norway have continued to rise and the rental market remains hot. Here’s what’s happening in the Norwegian property market.

Advertisement

The latest figures from Real Estate Norway show that the average cost of a house in Norway is now around 4.78 million kroner as the Norwegian property market continues to heat up.

The head of Real Estate Norway, Henning Lauridsen, said there was still “gunpowder” in the Norwegian market, as prices have risen by 8.2 percent so far this year. The summer and autumn are typically the peak seasons for the market.

This development has surprised many experts, as some analysts had predicted a downturn in 2024 due to rising interest rates.

“The housing price trend so far in 2024 is far stronger than what we envisioned at the start of the year, and in retrospect, we overestimated the effect of the interest rate increases and underestimated the wage increases on house prices,” Lauridsen said.

The key policy rate in Norway is 4.5 percent and isn’t expected to be cut until December. Analysts were initially concerned that high interest rates would dampen demand and prices, however as of May homes only spent 44 days on the market on average.

READ ALSO: What foreign residents in Norway need to know to get a mortgage

Bergen, on Norway’s west coast, was the region to see the highest price rises this year in Norway.

“So far this year, there has been a strong rise in house prices in all areas, and Bergen, Stavanger, Ålesund and Porsgrunn/Skien stand out with particularly strong development,” Lauridsen said.

The bad news with the higher prices is for those looking to get on the ladder or take the next steps.

“The nominal house price development is extremely strong compared to the high level of interest rates. Real wage growth, lower inflation, optimism and expectations of lower interest rates contribute to this development,” Carl O. Geving of the Norwegian Association of Estate Agents said to the Norwegian newswire NTB.

Advertisement

“Unfortunately, the trend is towards greater differences between those who can afford to own their own home and those who are relegated to the rental market. This should worry the politicians more than it apparently does,” he added.

However, only some were in agreement when it came to the strength of the Norwegian market.

Kyrre M. Knudsen, chief economist at Sparebank 1 SR-Bank, told NTB that real prices had declined due to inflation, with the exception of in Stavanger and that buyers had been more cautious than in recent years.

Meanwhile, chief economist Nejra Macic at the analysis firm Prognosesenteret said that prices may cool off towards the autumn.

Advertisement

“We believe in a cooling down. We are convinced that all growth in 2024 has already occurred. The May statistics will, at best, be slightly positive growth, but now we will see a flattening,” she told the business newspaper E24.

From there, she expects prices to continue increasing from 2025 to 2027 due to lower interest rates and a lack of new homes being built.

Therefore, she recommended that people try to buy in 2024 while they can still afford property.

Meanwhile, rental prices have continued to rise in Norway. This is due to a number of factors, according to head of politics, society and sustainability Carsten Pihl at Huseierne, an association for homeowners.

“The reasons include high interest rates, which lead to higher financing costs, and, not least, other high housing costs, such as insurance, water, drainage, and maintenance costs,” he said to the online newspaper Nettavisen.

READ MORE: How to find out if you're paying too much in rent in Norway

More

Comments

Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

See Also