Residential rental rates jump

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High housing prices and more restrictive lending policies are forcing many would-be first-time buyers to remain renters. That’s putting extra pressure on the rental market, which already is experiencing the annual autumn boom that occurs with the start of the university year.

Students seeking housing always put huge demand on the rental market at this time of year, while a 6.6 percent hike in average housing prices prevents them and many others from buying their first home.

“In May, June and July the influx of tenants has risen steadily,” Eirik Hauge, who heads rental agency Utleiemegleren in Stavanger, told business website dn.no. “Accommodation is rented out soon after it becomes available.”

Hauge said rents peaked in November 2008 before stabilizing after a fall in 2009. “In 2010 we’ve seen a new rise,” says Hauge.

Geir Skogheim of Utleiemegleren in Oslo’s popular Frogner district predicts a further rise in rental rates while chief economist Kjell Senneset at Prognosesenteret, a forecasting agency, believes residential rates will continue to rise, although at a slower pace.

Interest rates are expected to rise during the autumn. That would make buying a home increasingly expensive, and put more pressure on rental rates. Very few Norwegian homeowners borrow at fixed rates, so borrowing costs vary with fluctuations in interest rates.

Views and News staff