Housing prices in Norway have never been higher, and now they’re so high that the International Monetary Fund (IMF) is repeating warnings that debt levels present a serious risk to financial stability.
The IMF has confirmed earlier reports and warnings that household debt has risen much too high in Norway on the back of low interest rates and high property prices. Housing was already “strongly overpriced,” according to the IMF, even before the national real estate brokers’ association revealed the latest numbers for June showing prices up again over last year, by an average of 7.3 percent.
In Oslo, prices are up 13.4 percent over last June and an average 88.4 percent just in the past 10 years. On a nationwide basis, prices are up 74.6 percent since 2006. While prices fell 7.2 percent in the hard-hit oil capital of Stavanger, they were up 3.1 percent in Bergen, 5.8 percent in Trondheim and 11.4 percent in Hamar.
Small apartments cost the most in Oslo, where it’s not unusual for one-room units to sell for more than NOK 100,000 per square meter. Newspaper Dagens Næringsliv (DN) reported that a 13-square meter (130 square foot) unit in Oslo’s popular Fagerborg district sold for NOK 1.79 million (USD 215,000). “It’s just sick,” remarked one young woman at its open house. She did not participate in the bidding round.
The vacation home (hytte) market remains strong as well. Newspaper Aftenposten reported that a 39-square-meter cottage with no running water and no view sold for a record NOK 4.45 million last week. It was located, though, on the island of Lindøya in the Oslo fjord, just a 20-minute ferry ride from downtown.