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PROPERTY

How much will property prices in Norway fall by in 2023?

House prices in Norway are widely expected to fall next year. Real Estate Norway has released a forecast on how much it expects the Norwegian property market to dip in 2023.

Pictured are homes in Oslo.
House prices in Norway are likely to fall in 2023, with Oslo set to be the worst affected. Pictured are homes in Oslo. Photo by Nick Night on Unsplash

Next year will see a downturn in the Norwegian property market, with some parts of the country much more affected by the dip than other areas.

House prices will likely fall due to interest rate increases in 2021, 2022 and 2023. The key policy rate in Norway is currently 2.75 percent. However, Norway’s central bank, Norges Bank, will likely raise the rate to three percent.

“The interest rate has a great impact on house prices, and higher interest rates will further reduce the price development in 2023. We expect that the sharp fall in house prices through the autumn of 2022 will continue into the first half of the year, but that the development will be more positive in the autumn of 2023,” Henning Lauridsen from Real Estate Norway said.

Real Estate Norway expects home prices to fall around 3.5 percent nationally. House prices in Oslo will see much more significant falls, of approximately six percent. However, other parts of the country, like southern and south-western Norway, were likely to see more positive price development.

“Higher interest rates hit Oslo harder than other cities due to high prices and debt levels. We, therefore, expect house prices to fall somewhat here during the first half of the year. In the longer term, Oslo has a housing deficit measured against population growth. This means that we expect prices to rise again in the longer term in Oslo,” Lauridsen explained.

Norway’s other largest cities are set to see more modest increases and decreases of around one percent.

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PROPERTY

What you need to know if you want to rent out a room or annexe in Norway

If you’ve got a spare room or annexe you might want to put it to good use, especially as the earnings could be tax-free. Still, there are several rules in Norway you’ll need to be aware of.

What you need to know if you want to rent out a room or annexe in Norway

Plenty of homes in Norway, especially those that are more expensive, come with an independent annexe, and ad listings will typically list how much you can earn if you were to rent this out.

You may also have a spare room or basement you want to put to good use. Many see renting out annexes and basements as a great way to boost their income or offset the cost of their mortgage.

Long-term or short-term?

Before putting a room, annexe, or basement on the market for rent, you must have a rough idea of how long you want to rent it out.

The length of the tenancy will affect things like taxes and where you would want to list the property.

For example, Airbnb makes more sense for those wanting to rent a room or their property for a few weeks.

In Norway, rental income up to 10,000 kroner from short-term rentals is tax-free, provided each rental period is less than 30 days. After this limit has been reached, 85 percent of income is taxable at a rate of 22 percent.

READ MORE: The rules for renting out your home on Airbnb in Norway

If you have a dormitory, annexe or studio on your property that you wish to rent out for longer, then you will need to check that it meets the legal requirements to be rented out.

One of the most important distinctions is often made between whether the area you wish to rent out is an “independent unit” or part of the existing housing.

Whether the home has a separate entrance is typically one of the key distinguishers. Spaces that are considered independent units have stricter requirements, such as a private bathroom and fire safety measures.

Spaces must also have ceilings of at least two metres, with slightly different rules for sloping roofs. Certain rooms will also need to have windows and escape windows and a fire separation between the apartments.

Dormitories (hybel) are not considered independent housing, but the tenant must still have access to a bathroom and toilet, even if it isn’t their own private bathroom. The other rooms must be suitable for permanent residence under the rules of your local authority.

You can rent out a room in your home. However, the tenant must have access to a toilet in the home.

Should you choose to rent out a space, be that a room or dormitory, that doesn’t meet requirements, you could be legally liable for any incidents, or the tenant may have the right to terminate the tenancy or demand a reduction in rent.

Most Norwegians turn to Hybel.no or Finn.no to rent out a room or annexe. 

The tax rules

Renting out rooms or dormitories is so popular because the income can be tax-free in many cases.

A few requirements must be met for the income to be tax-free. You can rent out several dormitories tax-free on the same property, but there cannot be more than one “family flat/ familieleilighet” on the property. These are self-contained apartments suited for two adults and a child.

You must also collect less than half the rental value of the entire property. Alternatively, rental income is tax-free if all or part of the home is rented out for less than 20,000 kroner in the income year.

Norway’s tax administration has an online wizard that will give you an overview of whether your rental income will be tax-free.

Your responsibility as a landlord

As you will all be aware, renting out a room isn’t as easy as posting an ad and waiting for the tax-free income to roll in.

For example, you will need to have a proper contract in place, and the deposit must be paid into a separate account from the tenant or landlord.

There are also rules on when a landlord can access the property, and they will typically always need the permission of the tenant to access their space.

In addition, there are rules on when a landlord can raise the rent and how much by.

All this is as well as being aware of the rules and responsibilities for who covers what in Norway when things go wrong.

Luckily, there are plenty of organisations and resources, such as Husleie.no, that can offer landlords advice. These resources help with things like rent collection, contacts, and deposit accounts.

READ ALSO: The most common disputes between tenants and landlords

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