Record Year for Norwegian Real Estate as Prices Rise for the First Time Since 2016
Mandag morning, Eiendom Norge presented the December development in housing prices. For the first time since 2016, prices did not fall in the last month of the year. Instead, they rose by 6.4 percent, marking a record year for housing sales, with 107,000 properties put up for sale.
"This is the highest number ever," said Henning Lauridsen, CEO of Eiendom Norge. He warns of a new housing price boom, with experts predicting prices to increase by up to 10 percent, and more in Oslo. A Nordea economist even fears that Oslo prices could rise by 20 percent by 2025.
The statistics show that, despite significant population growth, Oslo builds far fewer homes per inhabitant than other major Norwegian cities. Lauridsen concludes, "The obvious explanation for the higher price increase is that supply is falling short in Oslo. The question of who should build does not affect the volume of housing construction. The only solution is to facilitate the construction of so many homes that price increases are not as steep as they were in the past ten years."
Oslo’s housing prices have doubled those of Trondheim and Bergen over the past ten years, despite building only half as many homes. Lauridsen says, "Oslo’s housing shortage is the primary reason for higher price increases. We need to build more homes to prevent prices from rising as sharply in the future."
Lauridsen notes that population growth in Oslo (11.3 percent in the last ten years) has outpaced other major cities like Bergen (6.5 percent) and Trondheim (12.6 percent). However, while population growth has been highest in Oslo, housing prices have increased much faster than the general price index (36.8 percent) in the same period.
Tobias Drevland Lund, a member of the Storting (Norwegian Parliament) and the housing spokesperson for Rødt, sees the current housing market as a "poisonous cocktail." He believes that without government intervention, housing prices could skyrocket in the coming years. Lund argues that the commercial housing market alone cannot solve the problem and advocates for the public sector to build affordable homes outside the ordinary market.
Lauridsen emphasizes that the key is to build more homes, not who does the building. Referring to Statistics Norway’s figures for the past ten years, he points out that Oslo has only built 0.36 homes per inhabitant, compared to over 0.70 in Bergen and Trondheim. Meanwhile, housing prices in Oslo have increased by up to 78.2 percent, compared to 42.5 percent in Bergen and 34 percent in Trondheim.
Oslo’s rapid population growth and housing shortage have led to a substantial increase in housing prices, which have more than doubled the general price index. To prevent such sharp price increases in the future, Lauridsen concludes that Oslo must facilitate the construction of more homes.
In other news, the requirements for obtaining a mortgage have been relaxed, with buyers now needing only 10 percent of their own capital, down from 15 percent before the New Year. This change has led to a 50 percent increase in inquiries about mortgages, particularly from young first-time buyers. However, Lauridsen cautions that the effect may be short-lived, and the risk is high that price increases will accelerate even further.
When asked about his advice for first-time buyers, Lauridsen emphasizes saving for a down payment, purchasing an affordable home, and accepting that one might not be able to buy in one’s desired location. He acknowledges that the situation is particularly challenging in Oslo, where many young people rely on parental help to purchase a home.
