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Wednesday, May 22, 2024

Rental rates jump with home prices

Not only are the prices for residential real estate hitting record levels in Norway, so are rental rates. After a quiet spring, rental rates are climbing again in Oslo and several other cities, with Airbnb getting some of the blame.

There are lots of new housing projects in the Oslo area, like these new units at Fornebu, but few projects are built as rental units and prices are high, especially for first-time buyers. PHOTO:
There are lots of new housing projects in the Oslo area, like these new units at Fornebu west of the city, but few projects are built as rental units and prices are high, especially for first-time buyers. PHOTO:

“We were really caught unawares when we starting hunting for an apartment,” Ronni Bjerke Albertsen told newspaper Dagsavisen. “It’s absolutely not cheap.”

He and his partner had been renting an apartment in Oslo’s traditionally working class Sagene district but got a message from the apartment’s owner that he was moving back and they’d need to move out. When they started looking around, they got a shock.

“Just a few years ago, we saw that a 40-square-meter (400 square foot) apartment was renting out for NOK 8,500 (USD 1,000) a month,” Albertsen said. “Coincidentally, the same apartment was back on the market now, with the rental rate raised to NOK 15,000.”

Statistics from the rental brokerage Utleiemegleren showed that the average rental rate for a one-room apartment in Oslo was NOK 9,186 in June. That’s up 7.2 percent from May and 6.7 percent from last summer.

‘Very expensive’
The rise in rental rates remains lower than the increase in sale prices in Oslo, which were up 13.4 percent in Oslo from June of last year. Those rose again in July, according to the latest statistics released this week, as demand continues to far outstrip supply. Norwegian Broadcasting (NRK) reported that in one recent sales transaction in Oslo, a small 28-square-meter one-room apartment sold for more than NOK 700,000 over appraisal. Prices for such a small one-room flat itself were less than half that, below NOK 350,000, just over a decade ago.

“The increase in rental rates has been more reasonable,” Magnus Wennberg, head of Utleiemegleren’s Grønland office in Oslo. But now, with students returning to the cities and prices up in general, renters are faced with increases as well.

“It’s very expensive to rent right now,” Lars Aasen, leader of the tenants’ organization Leieboerforeningen, told Dagsavisen. He thinks it’s worrisome, since most tenants are those who can least afford high housing payments, like students, young workers, migrant workers, refugees and lower-income families who can’t afford to buy a home. Aasen hopes developers will build more rental housing, to dampen the pressure on rental rates.

Airbnb effect
Others worry that the advent of Airbnb, which has prompted many homeowners to rent out rooms or their own apartments to tourists or others needing short-term accommodation, is pushing rental rates upwards. When apartment owners can charge as much as NOK 1,000 a night for their units, monthly rents can become high as well.

Aasen is calling for restrictions on commercial rental of Airbnb units. A recent search of Airbnb units on offer in Oslo, he said, showed that fully a third were rented out by owners offering a discount for rental terms of a month or more. That suggests owners aren’t using Airbnb to rent out rooms to low-budget tourists anymore.

Student organizations share his concern. “If more rental units are used for short-term rentals, it can become even more difficult for students to find a place to live,” said Marianne K Andenæs of Norsk Studentorganisasjon. Berglund



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