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Why property prices in Norway may not fall as sharply as first feared

A more optimistic forecast from DNB Markets indicates that house prices in Norway will bottom out sooner than expected and that the dip won’t be as great as first thought.

Published: 27 January 2023 12:10 CET

Pictured is an apartment block in Norway.

House prices in Norway may not fall as sharply as first feared. Pictured is an apartment block in Norway. Photo by Marla Prusik on Unsplash

House prices have fallen in Norway since last autumn. The dip comes after two years of robust growth and high demand in the Norwegian property market.

Much of the demand was triggered by historically-low interest rates making mortgages more affordable.

Over the past few months, several forecasts have indicated that home prices in Norway will fall for at least the first half of the year.

Analysts think this is due to a strong rise in interest rates throughout 2021 and 2022. Norway’s central bank, Norges Bank, has increased the key policy rate strongly in an attempt to control inflation.

DNB Markets, the securities division of the bank DNB, believes that house prices in Norway will likely bottom out by April, business and financial site E24 reports.

DNB Markets has issued such an optimistic forecast because it doesn’t believe that house prices follow interest rates as closely when interest is raised as when it is decreased. This means that house prices rise faster when rates are dropped but fall slower when they are increased.

“We have had a few rounds internally and have come to the conclusion that it does not look as bad as our gut feeling might suggest,” Oddmund Berg, a senior economist at DNB, told E24.

READ MORE: How bad is the situation in Scandinavian housing markets?

For this reason, the bank’s securities division also forecasts that property price decreases won’t be as steep as other financial institutions have predicted either.

Handelsbanken and Nordea Markets predict falls of four and five percent, respectively, this year, while DNB believes house prices will drop 2.6 percent.

In addition, it believes that the market will return to prices seen during the August 2022 peak by 2025.

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Home repairs in Norway: When are you legally required to call out a professional?

If you have friends or acquaintances in Norway who are homeowners, it probably won’t take long before you start hearing (horror) stories about the astronomical costs of hiring professionals to carry out any sort of repair work.

READ MORE: Why the cost of home renovations in Norway is rising

Replacing a fence on your family home property with a garden? Upwards of 200,000 kroner.

a Small bathroom upgrade? Around 300,000 kroner.

Replacing the wooden façade and isolation for a house? Up to 1,000,000 kroner.

All of the prices quoted above are real-life 2023 examples shared by a family living in a terraced house in the Laksevåg borough in Bergen, western Norway.

So, with the potential to save substantial sums by sidestepping high professional fees, is it any wonder that people in Norway are attracted to DIY repairs?

Key considerations before taking up a renovation by yourself

Yes, the prospect of overhauling your home without breaking the bank holds significant appeal in a country as expensive as Norway.

However, you must be aware of a wide range of regulations, safety considerations, and legal requirements before you start a renovation project.

The first reason why you should engage tradespeople in more ambitious fix-up projects is safety.

READ MORE: How does home buyer and seller insurance in Norway work?

A faulty bathroom or electrical installation can cause costly damages or even pose safety risks, such as leaks or fires.

Always remember that the stakes are also high when it comes to a home’s structural integrity, and that’s why complex projects should be left to professionals.

The second is compliance. Norwegian regulations mandate the construction and adaptation of certain rooms, such as bathrooms, which must adhere to strict standards (for example, they need special waterproof membranes).

You can find more information on the relevant building laws and regulations in Norway on the Building Authority’s (Direktoratet for byggkvalitet) webpage.

Last but not least, know that having work done on your property by yourself or an unlicensed worker can negatively affect the sale price of the home down the line – and even shield you from lawsuits.

There are multiple court cases each year where the buyers of a property sue the old owners over unqualified work that has been done on a property that wasn’t reported as such (in 2023, there was a case in Bergen where a homeowner made changes to a load-bearing wall by himself but claimed that professionals did the work… In the end, an inspection revealed that the job wasn’t done properly and negatively affected the house’s structural integrity; the old owner didn’t have documentation to prove that a licensed operator did the work, and he ended up being sued for millions of kroner).

That’s why most homeowners in Norway insist on having professional documentation of the work performed – the sales benefits are apparent, but it can also be very useful in the event of any unforeseen issues.

When to opt for professional services

From complicated plumbing installations and full-on construction to demanding electrical work, the stakes are high when it comes to home safety.

Therefore, it’s recommended to call upon the expertise of licensed tradespeople, particularly plumbers and electricians, when you need to opt for home maintenance and renovations that involve bathroom construction, electrical work, and construction that might affect the structural integrity of your home.

Bathrooms in particular can be quite tricky, as they need to have waterproof membranes and are often equipped with underfloor heating.

When it comes to electrical work, basic tasks like installing plug-in appliances and switching cover plates are permitted. Still, anything involving wiring, such as installing electric heaters or changing light fixtures, requires the expertise of a licensed electrician.

If you’re residing in cooperatively-owned apartment buildings (borettslag in Norwegian), the cooperative must approve any renovations or maintenance that may impact neighbouring units. This includes work affecting shared walls, floors, or ceilings.

READ MORE: The hidden extra costs when buying property in Norway

So, ultimately, while there may be some tasks homeowners can tackle themselves, such as minor electrical adjustments or cosmetic updates, complex projects involving construction, plumbing, or electrical systems require the expertise of trained professionals.

While expensive, their services will bring you peace of mind, and you won’t need to concern yourself with the “what ifs” associated with DIY solutions that might not stand the test of time – or professional scrutiny.

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