– It has never been less profitable to rent out housing than it is today. If you take the income and take away normal costs, and what you have to pay on your loan, then you are actually in the red as a landlord, says Are Oust.
– Either house prices have to go down. Or the rent has to go down a lot. Or the rental prices will have to rise further. The latter sounds very likely, says Are Oust, professor at NTNU School of Economics.
Photo: Bent Lindsetmo / NRK
He is a professor at NTNU School of Business and Economics and has researched the housing market for almost 20 years.
It has become far more expensive to rent a home in the last couple of years. In Oslo, rental prices have increased by nearly 16 per cent in two years. But the costs of own housing has increased much more.
The explanation is that loan interest rates have risen sharply, after 14 interest rate jumps by Norges Bank in two years.
But other ownership costs have also increased. Insurance, municipal taxes and property tax. Not least the property tax, which has been increased significantly for second homes under the current government.
The largest share of Norwegian rental housing is precisely secondary housing, according to a report that Samfunnskonomiksanalyse produced last year, on behalf of the government.
– I am not surprised that people sell when it is not profitable to own. We must expect to see a lot of that. The danger is that there are so many sellers that we get too few rental properties. And that it will be expensive and difficult to get a rental property when you need it, says Oust.
The housing researcher is a board member and co-owner of property companies in Trondheim, which are invested in both residential and commercial property.
– Rental properties disappear from the market at any time, says CEO. Henning Lauridsen in Eiendom Norge.
Photo: Birgitte Wold Ingebretsen / NRK
Eiendom Norway: – Most likely strong rental price growth
The figures for the rental economy that Professor Oust has on his desk are confusingly similar to the calculations that Henning Lauridsen, managing director of Eiendom Norge, sits with.
– For the first time, we have rental prices that are significantly below the cost of ownership, especially in the most expensive cities, he says.
Lauridsen believes that the development could lead to even tougher times for those looking for a home to rent.
– People do not buy homes for rental if it is not profitable. And rental properties disappear from the market at any time. That is the one consequence. The other consequence is that we will most likely see a continued fairly strong price increase in the rental market. A bit like what we have had in the last two years, he says.
– Increased loan limits for the Housing Bank have had an effect on housing construction. But it takes time, says Housing Minister Erling Sande.
Photo: Eirik Leivestad Hall / NRK
Erling Sande in the Center Party is housing minister in Norway.
He says that it is most important for the government to get control of price growth and interest rate growth, which affects both those who rent and those who rent out.
The minister has no solutions that will quickly solve the challenges of increasingly fewer and more expensive rental homes, but says that the government is working on the matter.
– In the short term, I think the most important thing we can do is try to get more rental properties onto the market. To facilitate that more of those who are considering renting out actually do so. We try that through boligdugnaden.no, he says.
Sande explains that it is a government service to help people get started with letting.
– No human right to engage in rental
The tenant association is growing strongly at the moment, and the organization points to members who are despairing of the situation they are facing.
– We have many cases of dismissals, and an increase in the number of eviction cases. A lot of people apply to the rent increase, of course, says Anne-Rita Andal, organizational secretary of the Tenants’ Association.
- It is the tenants we are most worried about, says Anne-Rita Andal, organizational secretary of the Tenants’ Association.
She points out that it is worrying that landlords are considering withdrawing homes from the market.
– We need the landlords.
– But it is not a human right to rent, but it is actually a human right to have a safe place to live at an affordable price, says Andal.
Even with rental prices rising less than house prices, she highlights the great lack of housing.
In addition to a lack of student housing, there is also a lack of municipal housing in the cities – and many renters with regular incomes are struggling to find somewhere to live.
Andal is calling for a new conversation about housing policy, the rental sector and profit in the housing market.
She believes that the rental sector we have now makes it impossible for tenants to enter the housing market.
– Why is it that it should be profitable to rent out housing? Could you rather imagine that you had a public or non-profit housing sector in Norway, in addition to the other rental sectors, where you rent out without profit?
– Which actually enabled people to save up to become home owners, I miss that conversation, says Andal.
Tags: Housing rentals historically unprofitable NRK Norway Overview news parts country
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