House prices skyrocketing, but dragging in the rental market

housing adsOslo.Housing ads : Vegard Wivestad Grøtt / NTB scanpix

Over the past five years, house prices in Oslo increased by 51.2 percent, whilst renting have increased by less than 25 percent. The rental market is lagging behind, according to a leasing agent.

The situation differs in the rental market from the house buying market, according to the newspaper Dagens Næringsliv.
Over the past year, prices have risen 9.1 percent nationwide and 16.2 percent in Oslo. In the capital the rental rate for a two bedroom apartment increased by only 2.9 per cent last year.

– One of the reasons that there is such little inflation in the rental market is that many investors have bought apartments to rent out, so the supply is greater. This keeps prices down, says Morgen Granhaug in M3 rental, which handles lease contracts for landlords.

Chief economist Kjetil Olsen and chief analyst Erik Bruce of Nordea writes in an article that it is much cheaper to own than to rent, which explains why house prices rise more than rents.

They point out that it is still more favorable to buy a residence of 30 square meters for three million kroner, than renting the same place. According to economists, house prices will continue to rise.


Source: NTB scanpix / Norway Today