The demand for smaller apartments is far higher than the supply, especially in Oslo. Nevertheless, the experts expect a broad drop in housing prices this autumn.
This 31 square meter apartment on Rosenhoff in Oslo was recently sold for NOK 290,000 more than the asking price. Photo: Hanne BrulandPublished:
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On Thursday, Norges Bank raised the key interest rate once again, to 4.25 per cent.
If the central bank’s forecasts are correct, interest rates on people’s mortgages will rise to 5.7 per cent in 2024. Only in 2025 will it start to go down again, we are to believe a recent monetary policy report.
“With many homes for sale and rising interest rates, we experience the market as very selective and price sensitive,” says Vincent Mabusa, partner and estate agent at Eie Eiendomsmegling, to E24.
290,000 above the asking price
At the same time, it is not the case that apartments are necessarily sold below the asking price.
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Mabuza himself recently sold a 31 square meter apartment at Rosenhoff in Oslo.
– The asking price was NOK 3,790,000. It was sold for 4,080,000.
The apartment was described as central and with access to good public transport in the advertisement. Located on the high first floor and with “classic details” such as original wooden floors and large window surfaces, 13 people chose to sign up on the list after viewing.
– Of these, four ended up as bidders, says the broker.
Expect a broad price drop
The demand for smaller apartments in the cities is greater than the supply, and especially in Oslo.
– This puts greater pressure on them, says analyst Marte Herje Strømme at the Prognosesenteret.
She points out that the vast majority of people in Norway finance house purchases with debt. Smaller apartments have lower valuation and interest expenses.
– This means that more people have the opportunity to buy these. When there are more about the bone, there will be more price pressure, says the analyst.
Marte Herje Strømme, analyst at the Prognosesenteret. Photo: Kilian Munch
House prices in Norway rose by 0.4 per cent in August, according to figures from Eiendom Norge. The cautious rise is the weakest August in the history of price statistics.
So far this year, prices are up 5.7 per cent nationally. At the same time, the market for more expensive homes has become tougher.
– Is it the case that it is the smaller homes that keep the market alive?
– They are probably easier to sell, because of course there are lower interest costs on these. At the same time, we expect a broad drop in prices for most objects this autumn, says Strømme.
Prices usually fall most on expensive homes, she explains.
– So the match will probably still be among the reasonable objects.
Predominance of large homes
About a fifth of Norway’s population lives alone, according to figures from SSB. In Oslo, this type of household constitutes about half of the population.
– In cities such as Tromsø and Stavanger, many homes have recently been built, which means that the balance in the housing market is better. But Oslo is lagging behind, says Strømme.
– The Conservatives won the election in the capital and have signaled that they want to scrap the apartment standard. What effect do you think it will have?
– It will probably lead to an increased development of apartments in the city centre. Hopefully it will be more diversified. There is a large preponderance of larger homes in Norway, and fewer smaller ones.
The investors are (almost) gone
Henning Lauridsen, managing director of Eiendom Norge, also believes that the housing market will become weaker in the future.
– But we think the impact on the small apartments will be smaller, especially in Oslo, he says.
Historically, the small apartments, especially in the capital, have fluctuated more in price than other homes, according to the Eiendom Norge manager.
Henning Lauridsen, CEO of Eiendom Norge. Photo: Johnny Vaet Nordskog
– They are often first-time homes, which are more affected by the interest rate than others who are in the housing market. Secondly, these types of apartments are often centrally located in cities.
Thus, they have often been interesting for rental investors.
– Now we see that they are almost gone from the market in Oslo, because it has become unprofitable to buy a rental property, says the Eiendom Norge manager.
Traditionally, investors are more sensitive to market fluctuations than the average home buyer, he explains.
– With less influence from here, we can get smaller price fluctuations on the small apartments.
Important with the right price
The broker in Eie Eindomsmegling, Vincent Mabusa, also foresees a decline in the smaller apartments, like the rest of the market.
– But the unique homes will probably experience a smaller price drop, he says.
In the case of the mentioned apartment at Rosenhoff, both the seller and broker were very pleased to be able to sell in what Mabuza describes as a “slow and difficult” housing market.
– With many homes for sale, it is more important than ever to price yourself correctly. Then you will still be able to sell, says the broker.
2023-09-24 09:02:50
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