Read news from:
Austria
SHARE
COPY LINK
For members

PROPERTY

Why has the cost of renting in Oslo increased so much?

Oslo is the most expensive city in Norway to rent, and several factors mean the cost of being a tenant in the capital has soared in recent years.

Published: 25 March 2024 16:21 CET
Oslo 1
How did the rent situation get this strained in Oslo? What's driving the upward trend, and is there any chance it will slow down in the short-to-mid term? Photo by Stock Birken on Unsplash

Rental prices in Oslo have surged by 30 percent over the past three years, according to figures from Finn Eiendom, the property section of Norway’s largest online marketplace, Finn.no.

As of January this year, the average monthly rent for an apartment in the capital was 17,900 kroner, up 3,500 kroner from 14,400 kroner in 2021.

READ MORE: Where in Norway have rents increased the most?

Similar trends of rapid rent growth have been seen across major Norwegian cities. Nationwide, there are between 10,000 and 15,000 too few rental properties available for rent. 

Rising demand and limited supply

Oslo’s population has been boosted by both natural population growth and immigration. This has outpaced the rate of new housing being built.

The city’s allure as an economic hub – it is the capital, after all – has attracted droves of residents, placing immense pressure on the rental market.

Kjetil J. Olsen, the managing director of the rental agency Husleie.no, said in press release earlier this year that the increasing population, coupled with a near standstill in housing construction, has contributed to surging rents.

On top of that, students moving to Oslo from all over the country to study, as well as the inflow of Ukrainian refugees to the capital, have both driven up demand.

The issue is expected to become more challenging as summer approaches and students who can’t secure student housing start looking at the private market.

This surge in demand clashes with a limited supply of available housing units.

Despite some efforts to incentivise construction, bureaucratic hurdles and zoning restrictions continue to impede developers, leading to a shortfall in available properties.

READ MORE: Could looser regulations combat rising rents in Norway?

Oslo building

Regulatory obstacles, like zoning restrictions and financial constraints such as the high cost of construction materials, slow down housing development in Oslo. Photo by Ditte Yven on Unsplash

Regulatory constraints

Regulatory measures play a pivotal role in shaping Oslo’s rental landscape – and the strict regulations governing property development are a significant hurdle in terms of growing supply.

Most real estate industry experts agree that zoning restrictions and taxes on second homes drive up rent prices, as they restrict supply and result in stagnant construction.

Zoning restrictions limit the areas where new construction can occur, while policies such as increased taxes on second homes, dissuade property owners from entering the rental market or prompt them to sell existing properties, further constraining supply.

Furthermore, Oslo also struggles with a critical shortage of small apartments, which is particularly problematic for young renters and students.

READ MORE: Thousands of small apartments are needed in Oslo to address housing shortage

Restrictive city policies, including bans on constructing apartments below a certain size, exacerbate the issue.

As a result, people seeking affordable accommodation are forced to contend with higher rents for larger units or seek alternatives which aren’t centrally located.

Interest rates, inflation, and stagnation in housing construction

Rising interest rates and high inflation have also driven up the cost of renting in the Norwegian capital.

Increased overheads, driven by mortgage repayments and tax liabilities, mean landlords pass on these expenses to tenants.

Therefore, as wages fail to keep pace with a rising cost of living, tenants face mounting pressure to allocate more of their earnings toward housing expenses.

So, despite the pressing need for affordable housing, a lack of new construction projects (which is unlikely to go away anytime soon) perpetuates the scarcity of available properties.

At the same time, regulatory hurdles, financial constraints (such as the high cost of construction materials), and zoning restrictions all contribute to the sluggish pace of housing development.

The urgency for implementing measures to address the housing crisis through policy reforms and investment incentives has reached an unprecedented level, and renters are understandably concerned.

However, regrettably, industry experts in the real estate sector agree that minimal relief can be anticipated in the short and medium term within Norway’s major cities.

Projections indicate that prices will continue to climb even higher by the year’s end, and several industry organisations, such as Real Estate Norway (Eiendom Norge) have expressed concerns.

READ MORE: Why the cost of renting in Norway will continue rising sharply

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

The key things you need to know about purchasing property in rural Norway 

Whether it's time to up sticks and get away from Norway's cities, or you've always dreamed of owning a holiday home in the country's stunning rural areas, there is some key info you need to know. 

Published: 26 April 2024 15:21 CEST
The key things you need to know about purchasing property in rural Norway 

This article was based on several questions from a reader. The Local Norway aims to answer readers’ questions, even if it isn’t used for an article. So if there’s something you’ve wondered whether it’s practical or cultural, you can drop us a line at [email protected] 

It’s no surprise that Norway’s countryside attracts so many admiring glances from across the world as, depending on where you end up, you could be within an hour’s drive of fjords, mountains, and forests. 

The prices explained 

The website Finn.no lists almost every property for sale in the country. After a few searches, it will quickly become apparent that homes in rural Norway seem like excellent value. 

Using figures from the property firm Krogsveen, the average cost of property per square metre in Oslo is 89,000 kroner, the national average is 50,674 kroner, and in Møre og Romsdal in western Norway, the average cost is much lower at 28,722 kroner. 

Møre og Romsdal is one of Norway’s more remote counties, home to stunning regions like Sunnmøre and Sunnfjord.

READ ALSO: How much does an apartment in Norway cost?

This illustrates how much more you can get for your money in rural parts of Norway compared to elsewhere.  

There are some reasons for the price differences. Firstly, some homes in rural areas require full-time residence. If you plan on moving full-time, this won’t be an issue. 

If you are after a holiday home, this will be a barrier. Prices are typically higher in areas that are popular with leisure property owners. 

Some of the cheaper homes will be “fixer uppers”, even if you want to keep the home’s original charm. Bathrooms, kitchens, plumbing and electrics can all be incredibly expensive. 

Furthermore, investing in these areas of the home is unlikely to directly increase the property’s value due to the low demand. 

Farms should be avoided 

The charm of a Norwegian farm is difficult to avoid, lots of room, a large welcoming home and bright red farm buildings. 

However, these buildings are worth avoiding unless you intend to use the property for farming. 

Rules on the ownership of agricultural properties date back more than 1,000 years, and there are a few key things to be aware of. 

Firstly, you will need to live on the property full-time and typically use it for its intended purpose: farming. You will also need to apply for a license to own the property. This is part of a government act to protect agricultural land. Then, there are a number of special rules to ensure that some farms remain in a family line. 

Farming in Norway isn’t a particularly profitable venture either, so taking over a farm may not be as attractive once all the rules are laid out. 

The rules for foreigners buying rural properties 

Norway’s property market has no restrictions on whether foreigners can buy property. 

This means you can buy a property in Norway’s stunning rural regions. However, there are several practical obstacles. 

Most practical issues don’t apply to full-time residents. 

However, non-residents can’t get a Norwegian mortgage as they have ties and income to the country. 

Furthermore, not having an electronic ID and identity number will make it quite difficult to put in bids on homes, set up utility bills for the property, and get a bank account to pay these bills. 

If you manage to purchase a place, you can obtain a D-number from the Norwegian Tax Administration to try to open bank accounts and pay bills. 

Other practical info

For starters, you will likely need access to a car if you buy a place in the countryside. 

Owning a car will be crucial for reaching amenities, and depending on how remote you choose to go, you could end up a 30-minute drive away or need a car suitable for tackling difficult terrain to reach main roads. 

You’ll also depend on a car to get to and from work and to ferry kids to school and back. 

Houses in rural areas may also have much more expensive running costs. Older, larger properties are notorious for sky-high energy bills in the winter. 

Of course, finding a suitable job to match your career ambitions can be much more difficult in rural areas than in the bigger cities. 

READ MORE: The downsides of life in the Norwegian mountains you should know about

SHOW COMMENTS