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Rapid growth hits housing market

July 3, 2012  

It took Norway a few thousand years to reach a population of just 5 million. Another  million, though, is expected just 17 years from now and cities like Oslo are struggling to keep up with demand for housing, as real estate prices soar.

Norwegian children marching in this year's 17th of May parade will be young adults when the population hits 6 million, and likely will contribute towards more growth. PHOTO: Views and News

Figures released recently by state statistics bureau SSB suggest that Norway’s population will grow by 20 percent, to 6 million, by 2029. SSB described the country’s population growth as “rapid” and sees signs that the growth will continue at the same tempo for several decades before finally slowing down.

The growth is linked to Norway’s strong economy, its expanding oil industry, social welfare programs that make it easier to combine careers with having children, and immigration. Only when or if oil and gas resources begin to decline will the pace of growth slow down, predicts Helge Brunborg, a senior researcher at SSB.

Norway’s population officially hit the 5 million-mark in mid-March, with much of the growth fueled by immigration as Norway attracts job seekers from countries where unemployment rates are high, like Spain and Greece. The pace of immigration is difficult to predict, according to SSB, but its researchers think 20 percent of Norway’s population will have immigrant background by 2050.

Making room for more
The influx of more people is prompting local governments to reform zoning laws and allow more housing density to meet demand in a market where prices have soared in recent years. Despite local protests, more neighbourhoods with mostly single-family homes on large lots will see more construction of new multi-family dwellings replacing the classic Norwegian villa, to make room for more households.

Norway’s national real estate organization reported high, stable real estate prices this week based on sales in June. A large seasonal surge of supply resulted in a relatively small average price rise from May of 0.9 percent in June, after strong growth in April, but average prices in June are up 7.7 percent since June 2011.

It remains an expensive undertaking to buy a home in Norway, especially in Oslo and in Stavanger, the main base for the oil industry. Some small flats in Oslo (called leiligheter) have been selling for as much as NOK 70,000 per square meter, even higher in exclusive new projects. That’s up from NOK 10,000 per square meter just 20 years ago, and real estate brokers link the high prices and spirited bidding rounds to pent-up demand and record low interest rates on home loans.

It’s not unusual to see modest 70-square-meter (700 square feet) flats in residential areas of Oslo advertised for NOK 5 million (USD 850,000) or more, while the number of homes on the market priced at NOK 10 million or higher has exploded in the past year.

Sales of even higher-priced homes and holiday homes, however, have slowed down in the past month. “I have the impression folks are being more careful,” Fredik von Krogh, head of real estate firm Aktiv eiendomsmegling, told Norwegian Broadcasting (NRK). “They’re thinking twice before buying.”

Views and News from Norway/Nina Berglund

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  • profwatson

    I am surprised that Norway wants to increase its population with immigration. The air pollution per capital of Norway is 10.5 and only 1.5 from Morocco. http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions_per_capita

    This means that Norway would be increasing global warming(to melt the Arctic ice and the glaciers). If the person stays in Morocco they will produce air pollution at a rate of only 1.5 and not 700% more if they came to Norway. This is unwise. This policy is going against Agenda 21(aka Agenda for the 21st Century) Sustainable Development(population control). “The current decline in population growth rates must be further promoted” UNAgenda 21 Sustainable Development.

    • GBCD

      Who exactly are we saving the planet for, Prof. Watson? Norway would not have replacement rate fertility which is what is required to sustain the inter-generational transfer schemes for the welfare of the population. Immigration is useful to suppress the price levels as a result of lower wages, in order to maintain the budgets that Norway uses to finance those climate change programs you hold dear, keep already ridiculously high prices lower and bring new ideas and networks for trade.

      Unless there is some racist/ethnocentric scheme at work, what is wrong with improving the living conditions of brown people from some messed up area. It is better that these brown people become indoctrinated under democratic, western ideals so that they become more like you. In general, as they integrate, immigrants have less kids and eventually adapt to the norms of the host country, thus becoming more “norwegian”. Unless you are afraid that Norwegian/Western culture is inferior, and that it might be wiped out, you have nothing to fear. Ideas that do generally stay are because they have won out the darwinist battle. Like better food from inmigrants. You have no idea how crappy Norwegian food was in the 60′s (lutefisk!)

      • GBCD

        That said I think that it’s still a housing boom, since prices are outpacing earnings growth.

        A major difference with California too, is that there is an overall budget surplus with reserves (oljefond), and that Norway can manipulate its currency. It is a net buyer of equity and bond debt. California is an issuer. California borrows, Norway loans at a profit.

        As sovereign it could back out of Schengen, but that would not necessarily reduce the push factor, especially to economies like the Greek one where people are leaving their kids abandoned at daycare or what have you or in Mexico where over 60,000 have been killed in a drug war. Obviously one tries to go where its better.

    • NorwayExpat123

      “I am surprised that Norway wants to increase its population with immigration. The air pollution per capital of Norway is 10.5 and only 1.5 from Morocco. http://en.wikipedia.org/wiki/L…”
      -”profwatson”

      I am amazed that someone can write something so despicable and not be called out on it. You want to keep people in abject poverty because that way they will pollute less? You do realize that poverty is the biggest killer in the world, right? You don’t want impoverished North-Africans to have a shot at a safe and healthy life in Norway because of your ill-conceived and unsupported assertion that it will increase air pollution?

      Tonnes of Co2 per capita does not equate to “air pollution per capita” as you want us to believe. The Norwegian figure is higher than it otherwise would be because of emissions by the oil industry, and therefore, adding an immigrant to Norway is not going to increase his/her “pollution” to 10.5 tonnes of Co2 per year. Also, if you think Co2 is the worst possible type of air pollution then maybe you should start by exhaling less.

      The solution to your environmental obsessions are not to keep Africans poor, but to educate and empower women to have control over reproduction. Anywhere this is done, birthrates go down and the economy improves. If you want to slow population growth that is the way to go. Also, new clean technologies can be developed to reduce emissions while giving as many people as possible a chance at a decent quality of life. These should be your goals if you want to help the environment without inadvertently killing people.