Residential

Investors continue to show interest in residential real estate, but the segment has seen changes over the past year. Development properties in central areas has remained attractive, while the interest in rental property investments has declined.

Transaction Market

The total investment market for residential real estate is the third-largest segment so far in 2024, with a total volume of NOK 7.5 billion YTD. Historically, residential properties have accounted for 9 percent of the total volume. In 2024, the share stands at 16 percent, above the historical average. Residential developers still need to replenish their land reserves to maintain a steady flow of units, and there is continued strong interest in prime plots in central locations. In the rental market, investors are "liquidating" apartment buildings to generate returns, and improving financial stability, rather than reinvesting in the segment.

Rental Market

The rental market for housing in Norway is relatively small compared to other European countries, with approximately 80 percent of the population owning their homes. Due to higher interest rates and stricter tax regulations, the number of secondary homes has declined over time, especially in Oslo. In Oslo, the supply side has remained persistently low with minimal residential construction in central areas combined with significant population growth. This has led to a dramatic increase in rental prices over the past two years. Rental prices have risen by nearly 10 percent so far in 2024, according to Eiendom Norge's metropolitan index.

New housing prices, regions

Housing Pricing Trends

Housing prices in Norway have shown strong growth in the first half of 2024. Prices in Norway have increased by 8.2 percent, and by 6.9 percent in Oslo, according to Eiendom Norge. Bergen, however, has experienced the highest price growth among Norwegian cities, with an 11 percent increase so far in 2024. The development in the resale housing market has been much stronger than anticipated at the beginning of the year. Data for the new housing market indicates more activity than previously, but construction still lags behind housing needs.

Resale property

Outlook

Eiendom Norge expects housing prices in Norway to increase by more than 4 percent this year, following strong growth in the first half of 2024. This positive trend is expected to continue, with several forecasters predicting significant price increases through 2027. We anticipate that interest in housing, particularly development plots in central areas, will remain particularly attractive in the foreseeable future. The turbulence in the new housing market appears to be behind us, which is likely to increase demand for investments going forward.