Residential

Residential Market Update 2019 H1

Record high volume of sold used residential units and 2.8 % y-o-y increase in Norwegian Residential Prices in 2018

Key points

  • A 2.8 % y-o-y increase in Norwegian Residential Prices after a solid Q4
  • Oslo again the main driver with a 6.3 % growth
  • A record high volume of sold used residential units in 2018
  • Slower turnover rate in 2018, driven by a stronger supply side
  • Significant fall in volume of started residential units in 2018
  • Regulation on requirements for residential mortgage loans prolonged until 31.12.2019

Residential prices

After a stable period throughout H2 2018, the seasonally adjusted residential prices increased by 0.7% in December. Real Estate Norway reports a y-o-y growth from December 2017 – December 2018 of 2.8%, once again driven by Oslo with an increase of 6.3%. The largest regional cities experienced a moderate increase, with Bergen and Kristiansand around 2.0%. Tromsø and Stavanger increased 1.2% and 0.4% respectively, while residential prices in Trondheim fell by 0.8%.

As of December 2018, ECON Nye Boliger reports an average price for new residential units in Norway of NOK 54,700 per m2, a y-o-y increase of 7.25%. Oslo tops the list with NOK 82,800, followed by Stavanger at NOK 59,800. Tromsø, Bergen and Trondheim lie in the range NOK 55-59,000 per m2.

Real Estate Norway reported a stable volume of existing homes sold in Norway for 2017 with 87,877. For 2018, an all-time high of 92,199 units were sold, representing a 4.9% increase y-o-y. A rising trend is also evident for new dwellings, with the sales volume for the two-month period ending in December was 5.4% higher than the same period in 2017 (ECON Nye Boliger). However, 2016 had a higher volume.

Stable economic fundamentals indicate a continued strong demand side for 2019. However, further increases in the key policy rate is expected to impair the purchasing power somewhat. Limited growth is expected for 2019 due to a notably strong supply side, significant volume of new dwellings entering the market and a prolongation of the regulation on requirements for residential mortgage loans.

Residential construction

The number of residential units under construction was 5.0% lower in December 2018 compared to December 2017. The volume of started residential units was stable throughout 2016 and 2017, however it decreased by 10.7% in 2018, indicating that completion will go down substantially from early 2020.