Home Business Insights & Advice Why Norway’s real estate market refuses to crash

Why Norway’s real estate market refuses to crash

by John Saunders
16th Sep 22 3:49 pm

Inflation and war have recently caused significant tremors in the global real estate market. In some places, prices are going up, in others, they’re going down, and in yet others, they have first gone up, only to start tumbling down again. This makes it much harder for investors to know where to place their money, given the uncertainty and likelihood that some markets might crash.

Among the markets that many UK citizens are investing in, Norway appears to be one of the safest in the coming years. Simply put, Norway’s real estate market refuses to crash, and in the following paragraphs, you will get to see why.

Norway’s real estate market overview

The Norwegian property market is characterised by a high degree of transparency. In Norway, it is possible to find pretty much all the necessary information about properties on the internet. This is perhaps one of the reasons that the country has experienced a considerable increase in the number of property buyers and sellers over the last decade, given the added safety it provides to both parties.

Norway’s real estate market is mainly driven by demand from buyers coming from other Nordic countries, as well as from abroad. Hence, it features the kind of buying power that is required – at least in the most central locations such as the capital of Oslo.

Demand for housing in Norway is up significantly

Norway is a small country with limited land availability. The demand for housing has increased over the years and this is why the prices of houses have gone up.

Norway’s population is growing at a rapid pace, in part because of immigration, and in order to keep up with this growth, there needs to be more housing available. The demand for housing has increased significantly over the years, which is among the reasons that the prices of houses have gone up, in addition to the inevitable effects of inflation and war.

In fact, the demand for housing in Norway has gone up considerably during the last year alone. According to The Local Norway, “there were 45 percent fewer rental properties on the market compared to the year before.” The strongest demand is seen in Oslo, and the most disadvantaged are those who come to the city and are required to rent. Due to the recent increase in interest rates and mortgage regulations, it is harder for first-time tenants to borrow money to secure an apartment.

This is not to say that investors should be put off from trying to buy and sell property in Norway. There is, admittedly, a solution that enables these tenants to secure a mortgage, despite the above-mentioned challenges.

Realkausjon – or, getting help with real estate collateral

Realkausjonist is a Norwegian term and a solution where one person (called “realkausjonist”) provides security in real estate on behalf of a borrower. This means that they provide surety for other people’s debts. Realkausjon is usually used when the borrower can’t provide the mandatory 15% equity when buying a home in Norway and needs help to get a loan approved or get a lower interest rate.

The realkausjonist is liable if the borrower is unable to pay interest and installments since the bank has been given a guarantee for the part of the loan for which security has been provided. What this means for the abroad investor, is that there is no significant cause for concern about the buying power in Norway, because even if the buyer doesn’t have enough equity, they can secure it with the help of a parent or other “realkausjonist.”

The economic future in Norway looks bright

Another reason that Norway’s real estate market refuses to crash, is that it is an oil-rich country with a prosperous economy, as it has been for many decades now. It is the world’s third-largest exporter of natural gas, and the country’s economy is a mixed model, which means that it relies on both private and public sectors.

The public sector provides services like healthcare, education, and transportation. The private sector provides services like banking, retailing, and manufacturing. This mix creates a strong foundation against changing world events, and a relatively safe haven for abroad investors, even in uncertain times.

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