Residential

Professional investors continue to show strong interest in residential property. Despite challenging times in the transaction market as a whole, we are seeing a high level of interest in residential property in terms of both development land and rental property. However, there is a tendency towards a bigger gap between offers, and investors are more quality-conscious than before.

Transaction market

Many professional investors are tuning into residential property. The period 2015–2018 saw annual residential property sales of NOK 8.3 billion on average (9 per cent of the overall market). For the period 2019–2022, the figure is 15.3 billion a year (13 per cent of the overall market). The residential segment has thus increased in both volume and as a share of the overall transaction market. Two of the biggest transactions in the past six months were Fredensborg’s acquisition of the Teleplan site and Pareto’s purchase of Borgenveien 4A.

Y-o-y growth Oslo rents

New housing prices, regions

Rental market

The lettings sector in Norway is relatively small compared with other European countries as some 80 per cent of Norwegians own the property they live in. In the larger Norwegian cities, with large student populations and a young demographic, the proportion of renters is far higher than in the country as a whole. Rents have made a leap after the weak trend seen during the pandemic. In our last report, we described a historically strong increase in residential rents in Norway. The increase is highest for flats, studios and flat shares in Oslo. The number of advertised flats is also sharply down compared with one year ago.

Residential as a share of total transaction market (2022)

Housing price growth

The housing market in Norway began 2023 with a minor comeback and has remained much stronger than expected following the big downturn caused by the high cost of living and steep interest rate rises in 2022. The newbuild market is still suffering from low turnover, and most of the demand is in the resale market. There is considerable uncertainty around further growth in house prices, and it will largely depend on what happens to future interest rates.

Resale property

Den høye aktivitetsveksten vi har hatt i norsk økonomi inntil nylig har bidratt til et brennhett kontormarked med svært lav arealledighet og uvanlig høy leieprisvekst. Selv om etterspørselen etter kontorareal skulle kjøle seg ned framover, antar vi at arealledigheten vil bli holdt nede av historisk lav tilførsel av nytt areal. Sammen med høy vekst i KPI, venter vi at lav arealledighet vil bidra til å støtte oppunder veksten i kontorleie til neste år.

Outlook

We expect investor appetite for residential property to remain strong. Rising interest rates are likely to put a damper on demand from home buyers. At the same time we are experiencing increased demand from tenants, which is pushing up rents. We expect this trend to continue for some time.