Nationwide real house prices were down 1.81% during the year to Q3 2022

Norway’s housing market continues to slow rapidly. The inflation-adjusted nationwide house price index fell by 1.81% in Q3 2022 from a year earlier, in stark contrast to a y-o-y growth of 7.15% in Q3 2021. It was the first decline since Q2 2019.

Quarter-on-quarter, house prices declined 4.02% during the latest quarter.

Real house prices rose by an average of 4.7% annually in the past two years. But in the three years prior, the housing market had been more or less steady, with house prices rising by a meager 0.95% in 2019, and falling by 1.05% in 2018 and 0.6% in 2018, after the implementation of stricter mortgage rules on January 1, 2017, which were focused on restraining house prices in Oslo. 

Demand is now falling, construction activity remains weak. 

In the first three quarters of 2022, residential property sales in Norway fell by 9% to 70,947 units from a year earlier, in contrast to y-o-y increases of 6.8% in 2021 and 3.6% in 2020, according to Statistics Norway.

Construction activity remains weak. In 2021, dwelling starts rose by a miniscule 0.7% y-o-y to 30,126 units while completions dropped 2.6% to 28,398 units.

Rents, rental yields: rental yields are low at 2.28% to 4%

Norway: city centre apartment buying price, monthly rent (2-BR apartments)
  Buying price Rate per month Yield
Oslo € 532,445 € 1,334 3.01%

Recent news: In December 2022, the Norges Bank raised its key interest rate by another 25 basis points to 2.75%, its eight straight rate hike since September 2021 when the key rate was 0%, in an effort to curb rapidly rising inflation. The central bank’s decision brought the borrowing costs in the country to its highest level since February 2009.

Norway’s economy grew by 2.5% in Q3 2022 from a year earlier, its lowest growth since the contraction in 2020, amidst supply chain disruptions and the adverse impact of the Ukraine crisis, according to Statistics Norway. On a quarterly basis, the economy advanced 1.5% in Q3 2022, following a 1.3% growth in Q2 and a 0.9% decline in Q1.

As such, the International Monetary Fund (IMF) recently revised down its 2022 economic growth forecast for Norway to 3.6%, from its earlier projection of 4% and following a 3.9% growth in 2021 and a 0.7% contraction in 2020.