Why Norway is headed for a property crisis
The supply of new homes in Norway has consistently failed to keep up with demand, leading to persistently rising prices and affordability concerns.
While housing shortages have been a pressing issue for years, the situation has now escalated into what many experts are calling an imminent crisis.
The latest home sales figures confirm that Norway's property market remains red-hot.
House prices surged 4.4 percent in January, with a seasonally adjusted increase of 1.4 percent – one of the strongest January gains on record.
Over the past 12 months, house prices have risen 7.3 percent, pushing the average home price to 4,712,860 kroner.
The sheer volume of transactions in January also underscores the market's intensity.
A record-breaking 8,528 homes were sold, a 25.6 percent increase from the previous year, while 7,498 homes were listed for sale, up 26.9 percent.
This surge suggests that many Norwegians are acting on pent-up demand, possibly in anticipation of upcoming interest rate cuts.
Experts warn of a deepening crisis
Henning Lauridsen, the head of the interest organisation Real Estate Norway (Eiendom Norge), has sounded the alarm on several occasions.
In a recent comment, he warned that Norway is now entering a full-blown housing crisis.
He attributed the sharp price increases to multiple factors, including improved consumer confidence, expectations of interest rate cuts from the central bank (Norges Bank), and moderate easing of lending regulations.
However, he accentuated one factor as the most critical: a historically low supply of newly built homes.
"With housing construction set to remain at record-low levels, we are now facing the full extent of the crisis," Lauridsen said.
He has called on the government to take immediate action, particularly as the housing shortage risks exacerbating pressures in both the rental and ownership markets.
NHO calls for dedicated housing minister
The Federation of Norwegian Construction Industries (NHO Byggenæringen) has gone even further, arguing that the government needs to appoint a dedicated housing minister to handle the crisis.
"With housing prices soaring and new construction at its lowest level since World War II, we risk an entire generation being priced out of the market," Nina Solli, head of NHO Byggenæringen, said.
NHO has laid out a set of proposals to jumpstart housing construction, including measures that would stimulate new home construction and expansions, reinstating subsidies for municipal rental housing, slashing planning and building approval times to speed up development, and other initiatives.
With elections approaching in September, NHO believes a Housing Minister would signal strong leadership and provide a dedicated figure to drive solutions.
The government's response
The government has acknowledged the crisis, with Prime Minister Jonas Gahr Støre announcing an ambitious goal of building 130,000 new homes by 2030.
Speaking in the Norwegian parliament (Storting) in early February, Støre emphasised the need for faster permit processing, deregulation, and improved conditions for students and young buyers, as reported by TV2.
However, many remain sceptical of whether these plans will translate into immediate action.
Lauridsen expressed concern over the government's slow response, urging new Finance Minister Jens Stoltenberg to take decisive steps as soon as possible.
"He must bring the housing crisis under control – not only as an economic stabilisation measure but to prevent long-term damage to the Norwegian economy," the Real Estate Norway chief said.
With new housing projects at record lows, it seems Norway won't be able to avert a full-scale property crisis, with escalating prices pushing affordability further out of reach, especially for first-time buyers.
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