Nationwide house prices up 1.12% during the year to Q2 2020

After almost eight years of uninterrupted growth, Norway’s housing market has been more or less steady in the past three years. The inflation-adjusted nationwide house price index rose slightly by 1.12% in Q2 2020 from a year earlier, an improvement from a y-o-y decline of 0.45% in Q2 2019. Quarter-on-quarter, house prices increased 2.62% in Q2 2020.

The housing market’s sluggish growth be partly attributed to the implementation of stricter mortgage rules on January 1, 2017, which were focused on restraining house prices in Oslo.

Demand weakens, construction activity continues to fall. Residential property sales in Norway fell by 3.8% to 38,220 units in H1 2020 from a year earlier, following a growth of 2.4% in 2019, according to Statistics Norway. Dwelling starts fell sharply by 13.4% y-o-y to 16,784 units in the first seven months of 2020, while completions dropped 11.3% to 15,831units.

Rents, rental yields: rental yields are low at 3.13%

Oslo apartment costs are expensive at around €8,162 per sq. m. 

Norway: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Oslo € 979,440 € 2,556 3.13%

Recent news: In August 2020, Norges Bank held its key rate unchanged at a record low of 0%, following four consecutive rate cuts since March, after economic activity has fallen abruptly as a result of the COVID-19 pandemic, aggravated by the severe decline in oil prices.

Norway’s economy contracted by 5.1% in Q2 2020 from the previous quarter, far worse than the previous quarter’s 1.7% fall and the steepest decline since the series began in 1978, as COVID-19 related lockdown measures forced consumers to stay at home and businesses to shutdown temporarily, based on figures from Statistics Norway. The country’s mainland GDP, which excludes the volatile oil and shipping sectors, declined by 6.3% in Q2 2020, the most on record. The overall economy is projected to shrink by 2.9% this year while mainland GDP by 3.9%, according to Statistics Norway.