Market in Depth

Economy improving for Norway

Lalaine C. Delmendo | February 20, 2022

Economy improving for Norway Norway's housing market remains strong, supported by low interest rates, limited housing supply, as well as improving economic conditions.

The nationwide house price index rose by 8.1% during 2021, the biggest y-o-y increase since 2016, according to Statistics Norway. However when adjusted for inflation, Norwegian house prices rose only modestly by 3.3% y-o-y in 2021. During the last quarter (Q4 2021), house prices fell by 1.9% (3.1% inflation-adjusted).

During 2021:
  • In Oslo including Bærum, the house price index rose by 6.5% during 2021 (1.7% inflation-adjusted), following y-o-y increases of 7.8% in 2020 and 4.6% in 2019. During the latest quarter, house prices fell slightly by 0.9% (-2.1% inflation-adjusted).
  • In Stavanger, house prices rose by 9.7% y-o-y last year (4.9% inflation-adjusted), almost at par with the prior year's 10% growth and in sharp contrast to a 3.2% decline in 2019. Quarter-on-quarter, house prices fell slightly by 0.5% in Q4 2021 (-1.7% inflation-adjusted).
  • In Bergen, the house price index rose by 6.3% during 2021 (1.5% inflation-adjusted), following y-o-y increases of 7.4% in 2020 and 4.2% in 2019. On a quarterly basis, house prices dropped 1.2% (-2.4% inflation-adjusted) during the latest quarter.
  • In Trondheim, house prices rose by 10.4% y-o-y (5.5% inflation-adjusted), up from annual increases of 6.4% in 2020 and 0.1% in 2019. During the latest quarter, house prices were up slightly by 0.2% in Q4 2021 (-1% inflation-adjusted).

Of the country's regions, Nord-Norge had the highest annual price increase of 11.9% during 2021 (6.9% inflation-adjusted), followed by Trøndelag excluding Trondheim (9.9%), Innlandet (9.3%), Vestfold and Telemark and Viken excluding Akershus (9.3%), Møre og Romsdal and Vestland excluding Bergen (7.8%), Akershus excluding Bærum (7.4%), and Agder and Rogaland excluding Stavanger (7.2%).

Demand continues to rise, despite pandemic-related restrictions. During 2021, residential property sales in Norway rose by 7.1% to 102,835 units, up from y-o-y increases of 3.7% in 2020, 3% in 2019 and 3.9% in 2018, according to Statistics Norway. Though in Oslo sales were down by 2.5% to 12,104 units.

Despite this, construction remains weak. Dwelling starts rose by a meager 0.7% in 2021 while completions were down 2.6%, according to Statistics Norway.

Overall economic conditions continue to improve. The Norwegian economy grew by about 4.1% last year, after falling by 2.3% in 2020 due to the COVID-19 pandemic. The economy is projected to expand by another 4.1% this year.

Anyone can own, occupy, and invest in real estate in Norway.

Analysis of Norway Residential Property Market »

Rental Yields

Oslo's rental yields are low(ish) - max of 4.6%

Yields for residential properties in Oslo range from 3.1% to 4.6%, with smaller properties yielding more than larger properties. After 8 years of continuous house price increases in Norway, Oslo's residential property prices are very high, making Oslo the world's 17th most expensive city in which to buy a home but this year there has been a decline in prices.

Properties in Oslo may cost around €7,500 to €8,300 per sq. m., depending on the size of the property, and with wide variations outside this band; monthly rents are around €1,300 to €2,600 for properties in Oslo between 45 square metres (sq. m.) and 120 sq. m.. Bergen and Fjords’ property markets of course offer cheaper alternatives.

In terms of residential prices, we believe that Oslo is the eighth most expensive capital in Europe, and not surprisingly has some of the lowest rental yields of any of Europe's capitals. Transaction costs are low in Norway.

Read Rental Yields »

Taxes and Costs

Taxes are generally high

Rental Income: Rental income of nonresidents is taxed at a flat rate of 22%.

Capital Gains: Capital gains from the sale of real estate property are taxed as ordinary income at 22%.

Inheritance: Norwegian inheritance and gift taxes were abolished as of 01 January 2014.

Inheritance of spouses is not taxed. Inheritance of children and parents exceeding NOR470,000 (€62,710) are taxed from 6% to 10%.

Residents: Residents are taxed on their worldwide income.

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Buying Guide

Total transaction costs are very low in Norway

Total transactions costs range from 3.75% to 5.63%, according to Global Property Guide estimates. The buyer pays all costs involved, including the 2.5% stamp duty. Real estate agent’s fee is around 1% to 2.5% (plus 25% VAT).

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Landlord and Tenant

Tenant protection laws are neutral

Norwegian law is neutral between landlord and tenant.

Rents: The rental market is free; the Law of Tenancy (2000) removed the last rent controls, with the exception of Oslo pre-war housing. Rents are comparable with that normally obtained in agreements in new lettings of similar properties in similar terms. In practice, this is not onerous to landlords.

Tenant Security: Notice is not required at the end of the contract if the contract was fixed term. However, if the tenant continues to occupy the premises for more than 3 months at the end of the contract and the landlord does nothing about it, then the agreement becomes an unspecified term agreement.

Read Landlord and Tenant »


Economic recovery

Norway’s mainland economy grew by about 4.1% during 2021, in contrast to a 2.3% contraction in 2020, thanks to a recovery in domestic consumption, as well as exports, according to Statistics Norway. Economic growth averaged 1.2% from 2009 to 2019.

The Norwegian economy is projected to grow by another 4.1% this year, based on government forecasts.

Norway GDP inflation
Norway’s petroleum industry is recovering rapidly, with Brent crude spot up more than 48% on the year in December 2021, at US$74.17 per barrel. That’s a huge improvement from the 21-year low of just US$18.38 per barrel it had reached in April 2020 but still below the average US$107.64 per barrel from 2011 to 2014.

The petroleum industry is the country’s largest industry, accounting for more than 20% of GDP, and around 47% of exports by value.

In the past seven years, the Norwegian Krone (NOK) has depreciated by about 33.4% against the euro, from NOK 7.5479 = EUR 1 in April 2013 to NOK 11.3369 = EUR 1 in April 2020. The krone lost 44.5% of its value against the US dollar over the same period, from NOK 5.7951 = USD 1 to NOK 10.4335 = USD 1 in April 2020.

Norway crude oil prices
The krone has been generally appreciating since, gaining 13.3% against the euro to NOK 10.0099 = EUR 1 in January 2022 and by 18% against the US dollar to NOK 8.8429 = USD 1.

Nationwide unemployment fell to 3.4% in Q4 2021, from 4.2% in the previous quarter and 4.8% a year earlier, according to Statistics Norway.

Inflation fell to a six-month low of 3.2% in January 2022, from 5.3% in the previous month. Inflation averaged 2.1% from 2011 to 2021.