Residential

Despite challenging times in the overall transaction market, we continue to see interest in housing - both for development sites and rental properties. At the same time, increased construction costs are putting pressure on land values.

Transaction Market

The share of housing transactions increased in 2023 compared to the historical average. Historically, housing has accounted for approximately 9 percent of the total transaction volume in the Norwegian market, with an average of just over NOK 8 billion per year in the period 2015-2018. In 2023, housing accounted for 21 percent of the total volume. Larger individual transactions are driving up the average, with the acquisitions of Bo-Coliving and Bonava at NOK 1.75 billion and NOK 1.5 billion respectively being the largest transactions.

Year-over-Year Growth in Housing Prices in Norway (nominal)

New housing prices, regions

Rental Market

The rental market for housing in Norway is relatively small compared to other European countries, where about 80 percent of the population owns their own home. Nationally, the number of secondary homes has declined over time, even more so in Oslo. A declining share of secondary homes particularly affects Oslo, where there has also been limited residential construction in central areas and high population growth. This has led to skyrocketing rental prices. The urban rental index from Eiendom Norge, which shows the rental price development in the four largest cities in Norway, shows that rental prices increased by 7.6 percent in 2023.

Residential as a share of total transaction market (2023)

Housing Price Development

In 2023, housing prices in Norway increased by 1.4 percent and 2.9 percent in Oslo. The development in housing prices was stronger than expected in the first half of the year, but after the summer, price development has been weaker, and lower real housing prices are observed with sustained high price growth.

The new housing market is characterised by low activity and weak turnover figures. Despite significant interest rate hikes, the resale housing market is functioning well, and roughly the same number of homes were sold in 2023 as in 2022, while the number of unsold homes is increasing. Weak growth in housing prices is anticipated in 2024 before an upturn is expected in 2025 and 2026, according to Norges Bank.

Resale property

Outlook

We expect the appetite for housing in general, and land in particular, to remain attractive going forward despite a challenging new housing market. The interest rate peak is most likely behind us, which may contribute to increasing demand for housing investments in the future.