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Everything you need to know is included in our Norway Property Pack
Are you thinking of investing in property in the land of Fjords? Are you wondering if it's the right time to buy?
People have different understandings of market timing. Your Norwegian friend might suggest that now is the ideal time to buy property, while your colleagues in Oslo may think that prices will soon decline.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Norway, we rely on reliable data and statistics instead of personal opinions or rumors when we work.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Norway.
We hope this article proves valuable to you.
How is the property market in Norway these days?
Norway is, today, an incredibly stable country
Positive
Stability is the most important factor to consider when purchasing a property in a country. It ensures long-term security, protects investments, and promotes a favorable environment for economic growth and personal well-being. It is an information you need as a foreigner looking to buy a property in Norway.
You probably know it already, Norway is extremely stable. The last Fragile State Index reported for this country is 12.7, which puts it in the top 10 globally.
Norway's stability is largely attributed to its robust welfare state funded by substantial revenues from its oil and gas reserves, managed prudently through the Government Pension Fund Global, which ensures economic resilience and social equity. Additionally, its strong democratic institutions, low corruption levels, and a high degree of social trust contribute to a cohesive society that effectively navigates challenges.
First signal is very positive, let's now look at the economic forecast.
Norway is positioned for growth in the coming years
Positive
You have to check the country's economic health before making a property purchase.
According to the IMF's estimations, Norway is set to conclude 2024 with a growth rate of 1.5%, which is promising. Regarding 2025, the consensus estimate is 1.9%.
This steady growth might keep going since Norway's economy is expected to increase by 7.9% during the next 5 years, resulting in an average GDP growth rate of 1.6%.
A moderate growth rate in Norway suggests a stable and predictable property market, reducing the risk of sudden price drops and making it a safer investment. Additionally, steady growth can lead to consistent returns over time, making it an attractive option for long-term investors.
Nevertheless, there are other indicators to watch.
Norwegian business owners are steadily increasing their trust in the economy
Positive
How do Norwegian perceive their economy? The GDP forecast won't tell us. Fortunately, in Norway there is an established metric that is routinely disclosed. We're lucky because this isn't true for every country.
The Business Consumer Index (BCI) is a metric that assesses business leaders' confidence in the current and future economic conditions, derived from surveys and assessments.
The Statistics Norway's data indicates that the Business Confidence Index is currently 4 for Norway. For interpretation, it's quite low.
If we look at the data, however, we can see some positive signs. It's going up: the BCI score, 12 months ago, was -6.
This score isn't necessarily negative. Recently, the Business Confidence Index has reached minimal levels in many countries worldwide. Additionally, low confidence scores can sometimes indicate temporary uncertainty, which is a normal aspect of economic cycles. Let's review further data to assess whether it's a good time to invest in Norway.
Norway is dispensing less building permits
Neutral
The number of permits issued for development projects can help you decide if it's a good time to buy property in a country. More building permits being delivered showcases a strengthening property market with promising prospects.
Unfortunately, the number of building permits issued is declining in Norway.
Over the past year, according to Statistics Norway, the number of building permits granted by Norwegian local institutions fell by 3.8%, from 29,786 to 28,664 units.
Without a doubt, this is a discouraging signal. Let's analyze more data.
But before that, keep in mind that if there is a reduction in building permits, it will result in a diminished supply of real estate. Consequently, there is a higher chance of property prices increasing in Norway in 2025.
Norwegian housing market on a 5-year rise
Positive
Norway's home prices have increased by 23.7% in 5 years according to Eiendom Norge/Real Estate Norway.
It means that if you had bought a log cabin in the Norwegian Fjords for $750,000 five years ago, then it would now be worth around $928,000.
Recently, there has been a notable long-term upward trend in Norwegian house prices, accompanied by monthly fluctuations.
Certainly, it's a positive indication. If you are considering purchasing a property in this country, and if this trend persists, there is a chance your investment will appreciate.
You can find a more detailed analysis of the real estate prices in our property pack for Norway.
Everything you need to know is included in our Norway Property Pack
Norway's population is growing and getting (a bit) richer
Positive
When seeking to acquire real estate, population growth and GDP per capita should be given careful thought because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Norway, the average GDP per capita has changed by 4.3% over the last 5 years. It's not much, but the growth is here. Furthermore, the Norwegian population is growing (+5% in 5 years).
This means that, if you purchase a cozy cabin in the Norwegian fjords and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Norwegian cities like Oslo, Bergen, or Trondheim in 2025.
Rental yields are average in Norway
Neutral
Rental yield is a commonly accepted measure for evaluating real estate investments.
It's the annual rental income of a property divided by its price. For example, if a Norwegian property is purchased for 3,000,000 NOK and generates 150,000 NOK in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Norway offer gross rental yields ranging from 1.9% and 4.6%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Norway.
It means that your income potential is relatively moderate.
As previously observed, the supply of real estate will remain constant, indicating that property prices are unlikely to change. However, there might be a slight growth in the number of affluent tenants. Consequently, rental yields might increase in Norway in 2025.
Everything you need to know is included in our Norway Property Pack
In Norway, inflation is projected to remain minimal
Neutral
Inflation is the long-term increase in the prices of goods and services.
It's when your favorite cup of coffee in Oslo costs 40 Norwegian kroner instead of 35 Norwegian kroner a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, potentially leading to capital appreciation.
- Inflation can result in higher rental rates, increasing the property's cash flow.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, helping preserve the investment's value.
- Diversifying into real estate provides stability during periods of inflation.
In accordance with IMF projections, over the next 5 years, Norway will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data infers that Norway is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.
Is it a good time to buy real estate in Norway then?
Time to conclude !
Norway is known for its stability, both politically and economically, which makes it an attractive place for investment. As we look towards 2025, this stability is expected to continue, with the country's economy projected to grow by 7.9% over the next five years. This translates to an average GDP growth rate of 1.6%, which is a healthy sign of steady progress. Such consistent economic growth suggests that the property market will remain stable and predictable, reducing the risk of sudden price drops. For anyone considering a long-term investment, this kind of environment is ideal because it offers the potential for consistent returns over time.
Another factor to consider is the current trend in building permits. Norway is issuing fewer building permits, which could lead to a tighter housing supply in the future. When supply is limited and demand remains steady or increases, property values tend to rise. This scenario could make 2025 a strategic time to buy property, as the reduced issuance of building permits might lead to increased property values, benefiting those who invest now.
The Norwegian housing market has been on a rise for the past five years, and this trend is likely to continue. With a growing population that is also becoming slightly wealthier, the demand for housing is expected to remain strong. This growing demand, coupled with the limited supply due to fewer building permits, could further drive up property prices. For potential buyers, this means that purchasing property in 2025 could be a wise decision, as they might benefit from the appreciation in property values over time.
Moreover, rental properties in Norway offer gross rental yields ranging from 1.9% to 4.6%, according to Numbeo. This range of rental yields provides an opportunity for investors to earn a steady income from their property investments. Additionally, with inflation projected to remain minimal, the purchasing power of rental income is less likely to be eroded over time. This combination of factors makes 2025 a potentially good time to buy property in Norway, as investors can enjoy both capital appreciation and rental income in a stable economic environment.
We genuinely hope this article was useful!. If you need to know more, you can check our our pack of documents related to the real estate market in Norway.
-Will real estate prices go up in Norway?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.