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PROPERTY

Where in Norway are house prices rising the fastest?

The growth of property prices in Norway this year has surpassed what many industry experts expected, but where in the country are they rising the fastest?

Published: 5 June 2023 16:08 CEST
Updated: 15 June 2023 10:19 CEST
Oslo building
Photo by Marta Santos on Unsplash

Towards the end of 2022, most Norwegian commentators and analysts following the real estate industry agreed that 2023 would be characterised by a cooling housing market, with lower prices.

However, actual market developments have proved these forecasts wrong already and Norwegian households have shown that they are better equipped to handle higher interest rates than what even the central bank (Norges Bank) predicted.

READ MORE: The biggest issues facing first-time home buyers in Norway in 2023

Several factors are currently keeping housing prices high, including high wage growth, a high degree of job security, increased population growth, and, especially thee low number of new houses being built.

The latest housing price figures

House prices in Norway increased by 0.8 percent from April to May of 2023, according to the latest figures from Real Estate Norway (Eiendom Norge), but certain parts of the country are seeing prices rising faster than others.

Notable price hike in the capital

In Oslo, house prices have notably risen over the past six months. So far this year, prices in the capital have risen by 7.3 percent.

Due to price dips late in 2022, housing prices in Oslo are now 0.5 percent higher than they were 12 months ago. Still, that is 0.2 percent higher than the previous all-time high registered in August last year, according to the newspaper Dagens Næringsliv (DN).

Managing Director Carl O. Geving of the Norwegian Association of Real Estate Agents (NEF) pointed out that Oslo prices are so high that many people will likely struggle to take out loans.

“A lot of people will struggle to secure financing when the prices per square metre are over 92,000 kroner on average and the mortgage interest rate is approaching five percent. This will probably limit price growth in Oslo in the near future,” Geving said.

Strongest price growth in Kristiansand and Stavanger

The historic region of Romerike, in south eastern Norway, registered the most vigorous seasonally adjusted price development (meaning that prices were modified to take into account seasonal fluctuations such as higher prices in the Spring/Summer and lower prices in Autumn/Winter). In May, prices in Romerike rose by 1.1 percent, according to Real Estate Norway.

Bodø and Fauske had the weakest seasonally adjusted price development, with a seasonally adjusted price decrease of one percent.

So far in 2023, the biggest price rises were seen in the southern Norwegian cities of Kristiansand and Stavanger (with their surroundings), with an increase of 12.5 and 11.8 percent, respectively.

The weakest development so far this year was seen in the northern city of Tromsø, with an increase of 4.4 percent.

“So far this year, Kristiansand and Stavanger and their surroundings stand out with great growth in house prices. Kristiansand has long had a price level well below the other medium-sized cities in Norway. Now, however, the price level in Kristiansand is about to rise to the same level as the other cities in Norway,” Lauridsen said.

“Unfortunately, new home sales are still very weak. Hopefully, the robust developments in the second-hand housing market will, at some point, also spill over into the market for new housing, provided that the builders manage to get control over the costs.

“There is a need for new homes, and they are not currently being built. It is absolutely necessary to build enough homes in Norway so that we avoid imbalances in the housing market further along the road,” the head of Real Estate Norway said.

It took an average of 35 days to sell a home in Norway in May, down from 40 days in April.

Moderate price changes expected in coming months

Real Estate Norway expects price growth to slow down in the months ahead.

“Many homes were sold in May, and so far this year, more second-hand homes have been sold in Norway than at the same time in 2022.

“There has also been great growth in the number of new second-hand homes on the market throughout the month. This indicates a more moderate development in house prices in the coming months,” Lauridsen said.

“So far this year, house prices have risen far more than everyone expected at the start of the year. If things follow typical patterns and fall through the autumn, we will probably end up with an increase of 3-4 percent in 2023,” he said.

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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.

Published: 14 June 2024 15:28 CEST
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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