Oslo has alarming numbers when it comes to new homes for sale, and it will get worse in the coming years.
OSLO KONSERTHUS (Nettavisen Økonomi): Many are concerned about the high housing prices in Oslo, and that the entrance fee for especially young people in the Oslo market is very high. Without the support of parents and family, they are virtually hopeless.
– The central parts of Oslo are inaccessible to the average Norwegian without inheritance, stated chief economist Kjetil Olsen in Nordea Markets in a post at a housing seminar in Oslo on Tuesday.
And an important reason for the high Oslo prices is that it is built far too few new homes in recent years. All the speakers at the seminar were concerned about it, while elsewhere in the country the situation is quite the opposite. On a national basis, enough is being built, and well so be it.
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At the bottom
The lack of new construction in Oslo is reflected in how many new homes are currently for sale. Here, Oslo is by far the worst in the country in terms of population, which is admittedly not the best ratio.
But as the table below shows, the inhabitants of Oslo currently have only 957 new homes they can buy, according to what is available on Finn.no. This corresponds to 0.14 per cent of the population in the capital. Only Nordland and Troms and Finnmark can offer fewer new homes than the capital, counties with a much lower population.
CEO Sverre Molvik of Selvaag Bolig is just as concerned about the large imbalance if we go down to the city level.
Here, the figures from Finn.no (see below) show that there are as many as 940 new homes for sale in an area of Stavanger and Sandnes. These are cities that together (210,000) have less than a third of Oslo’s population.
In Trondheim with its 208,000 inhabitants, there are 961 new homes for sale, on a par with Oslo. The inhabitants of Bergen (284,000) have 631 new homes to choose from. Adjusted for the population, it is still a good deal more than in Oslo. There are otherwise some uncertain estimates for the population, but nothing that affects the conclusions.
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Imbalance
– It shows how beyond the imbalance is in Oslo, Molvik says to Nettavisen Økonomi, and also refers to what is to come.
Figures from Selvaag Bolig show that 1800 new homes were completed in Oslo last year. The estimate for next year is approx. 1650, ie a decline, and 1700 new homes in 2023. The number may increase somewhat, but is still far from what is needed.
– The estimated need in Oslo is approximately 4,000 new homes a year in the so-called intermediate alternative from the Forecast Center, says Molvik.
– And there is no chance to build in the next few years?
– No, no, the completion of new homes will not at least not rise significantly, but most likely go down further. I am concerned on behalf of inflation in Oslo.
Labor immigration
– And when we see the shortage of labor in, among other things, the service sector in Oslo, I think it will lead to increased labor immigration, he answers.
The figures in the tables above are actually even worse for Oslo, because the capital has a much larger proportion of households where only one person lives. The national average is two people per household.
City Council Secretary Rasmus Reinvang (MDG) was at the seminar concerned that in 2020 more housing than the population growth in the capital was completed. Molvik has another approach to the problem:
– We do not know how big the population growth would have been if there had been a much larger housing supply, he counters.
– Will the gap lead to increased imbalances between supply and demand in Oslo in the next few years?
– Yes, and on the supply side, it is impossible to do anything about it, even if you were to have some new homes urgently regulated. There will be a larger gap ever between supply and demand, which will lead to a price increase, is the gloomy message to those who want to enter the capital’s housing market.
No doubt
Molvik says that Selvaag Bolig sells homes to most people, and there is a ceiling for how much they can cost.
– But there is no doubt that there will be a price increase in Oslo. There will be a rise in prices in Oslo that is greater than in the rest of the country, despite the fact that the percentage is already at high levels.
– But the rise must stop somewhere, people do not pay 20 million for a 2-room apartment?
– No, but the serviceability is great, as the interest rate is low, and it will still pay to own rather than rent, Molvik answers. To the question of whether the main problem is that there are not enough residential plots, the answer is:
– The plots exist, but the detailed zoning plans are so far away.
By that he means that from the main plan for the development is approved until all the details of the project are ready, it can take many years.
Want new
Another factor that is pushing up new construction is that younger home buyers today to a greater extent prefer new flats to second-hand flats.
Molvik’s predecessor, Baard Schumann, pointed out to Nettavisen that the rental prices in the new construction area Løren in Oslo east are therefore higher than in the more established Skøyen in Oslo west.
– Yes, we see the trend clearly, and it is a topic that has not been talked about so new. The share from when I entered the market has increased from 10 percent to somewhere between 20 and 30 percent. The young people are not able to renovate a home in the same way as before, states the housing top.
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On the way up
And the cost of building new homes is not going down, on the contrary. Robert Nystad, head of analysis at the business broker Union, has looked at the average construction cost for new homes in Hovinbyen, at the bottom of Groruddalen: What does the actual construction cost?
Nystad came to NOK 46,700 in pure construction costs and total costs for the developers of NOK 60,000 per square meter. But it is before land costs, which have risen sharply.
With NOK 30,000 per square meter in plot costs, new homes in Oslo are now being sold for NOK 100,000 per square meter in areas near Ring 3. Then we are talking about NOK 7.5-8 million for new 3-room apartments of 75-80 square meters.
– We have typical construction costs of 45,000 kroner per square meter, Molvik comments.
Very good
– How would you describe the housing market now?
– We sold better in the third quarter than in the second quarter. The market looks very good now, it has recovered.
– Most likely, the interest rate increases will be absorbed. The mortgage regulations on five times income trump interest rate increases, and our homes are in the average market, Molvik answers.
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