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Tuesday, May 17, 2022

Rapid growth hits housing market

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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