Prices for residential real estate in Norway fell in July for the second month in a row. Rental rates, meanwhile, have skyrocketed, especially in Oslo, where they were up 17 percent in July, just as thousands of students are pouring into the capital in need of housing.
Newspaper Aftenposten reported this week that the average monthly rental rate for a two-bedroom apartment in Oslo is now NOK 18,405 (USD 1,844). In attractive neighbourhoods, rates are much higher, with one three-room apartment in the Majorstuen area renting for NOK 27,000 a month. Would-be tenants compete hard for rental contracts, with some reportedly bidding over advertised rental rates.
At the same time, thousands of students are on waiting lists for housing in both the public and private sectors. Accommodation in a state-subsidized student housing project runs around NOK 10,000 a month, depending on the size of the apartment.
“We’re seeing an enormous and record-high (rental rate) increase that’s both shocking and expected,” said Kjetil J Olsen, who runs the website husleie.no, a contract platform for both renters and landlords. It thus contains updated data on rental rates. Olsen told Aftenposten that he doesn’t think the rising rental rates will peak any time soon. “The supply of rental housing is simply not big enough in Oslo,” he said.
Rental rates are up 12 percent nationwide over this time last year, with demand outpacing supply in other Norwegian cities from Tromsø in the north to Stavanger in the south. Newspaper Dagsavisen reported this week that nearly 16,000 students still lacked housing around the country, with classes due to start in just a few weeks.
The Norwegian students’ organization NSO calls it a housing crisis that they warned about. “The fact that 15,893 students are still on a waiting list for housing illustrates the pressure the rental market is under,” NSO leader Oline Marie Sæther told Dagsavisen. She’s glad that supply increased by around 1,000 units, but it wasn’t enough to meet demand.
In the commercial rental market, competition remains fierce for units becoming available. Students aren’t the only ones in need of housing, especially after real estate prices soared so high that first-time buyers have trouble breaking into the market. They need to keep renting at ever-rising rates, since landlords claim a need to pass on their higher costs for everything from property tax increases to maintenance fees and utilities.
Rental rates in Norway can be raised 12 months after a contract has been signed or changed. They can rise in line with the rise in the consumer price index, currently at 6.4 percent, but many landlords try to raise them by more to cover costs that have risen higher. City officials in Oslo have also boosted rates for public housing on offer, with a two-room flat often now costing NOK 15,000 a month. Tenants on fixed incomes complained to newspaper Dagens Næringsliv (DN) recently that the city also is known for poor maintenance of its rental units.
The Socialist Left Party (SV) has sought a ceiling on rental rates in Norway’s biggest cities but the Labour-Center state government hasn’t wanted to regulate rental rates. It claims more residential construction would help ease the housing crunch. Critics respond that high construction costs, a lack of workers and bureucratic delays in getting projects approved have stymied new residential projects in Oslo and elsewhere.
Prices for those able to buy property, meanwhile, fell on a month-to-month by 1.1 percent in July, following a decline of 1.2 percent in June. Prices are still 5.2 percent higher than they were in July of last year, but the market has eased for prospective buyers. National real estate organization Eiendom Norge reported this week that 3,667 homes were put on the market in July, up 13.8 percent from July 2022. When supply increases, prices ease, too.
With interest rates rising and expected to jump again this month, housing prices may decline again. Rental rates, however, are expected to keep climbing, especially if the owner carries a mortgage on the unit.