Housing has become so much more expensive

The short version

• House prices have risen much more than wages over the past 30 years. This makes it more difficult to enter the housing market.
• A report predicts house price increases over the next four years of 33 per cent in Oslo and 25-26 per cent in Bergen, Trondheim, Kristiansand and Tromsø.
• The reason for the growth is that few new homes are being built and that more people will live in the cities.

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Today’s home buyers need more than twice as many annual salaries like their parents to enter the housing market:

• A home buyer in 1993 had to get out 1.4 annual salaries to buy an apartment of 50 square meters.
• Last year, the buyer had to leave 3.9 annual salaries for the same apartment.

In the calculator below, you can choose both the size of the home and which years you want to compare:

The numbers in the graph are worth noting average figure for the whole of Norway. In most places in the country, the amounts in the graph will not agree with reality.

Our calculator also makes a simplification when it multiplies the number of square meters up and down. In reality, the price per square meter is higher for small apartments than for large ones. We do not take that into account.

The point of the calculator is to compare between year.

And there is no mistaking the tendency: In the last thirty years, house prices have risen much more than wages.

Did you buy your first home during the pandemic? Then we would like to talk to you! Consult VG’s journalist here.

– Much more difficult

– The calculator gives a good indication of the development in people’s purchasing power in the housing market, says chief economist Andreas Benedictow at Samfunnskonoskomnis analysis.

– It has become much more difficult to get into the housing market, he says.

Benedictow, who has previously worked at Statistics Norway (SSB) and at Norges Bank, also says it is worth noting that the housing price measured in terms of the number of annual salaries is unchanged from 2017 to 2023.

– This is partly because there have been a few years of moderate house price growth before and after the pandemic, and partly because wage growth has clearly increased in recent years. This means that the real price of housing is unchanged during this period. On the other hand, interest rates are significantly higher now than in 2017, which means that it has nevertheless become more difficult to finance an adequate mortgage.

Could be a new price gallop

– The calculator is a simplification, because there are large local variations. But the conclusion is correct, comments Karin Bruteig, head of sales and marketing at Krogsveen.

– Why has it become like this?

– In the post-war period, we were completely unprepared to build housing in Norway. It lasted until the housing crash at the end of the 1980s. After that, we have built fewer homes in relation to population growth, says Bruteig.

– Will it continue like this?

– We think so. There has been a slight dip, but now we notice that people want to buy again. For some years, very few new housing projects have been started. Therefore, we may have a new price gallop in 2026–2027, says Bruteig.

– For you estate agents, this is good news, isn’t it?

– No, price gouging is not in anyone’s interest. It’s a very short-term thought. Even if we are only thinking about ourselves, we are best served by as many people as possible being able to buy a home, replies Bruteig.

House prices are to rise by 30 per cent in the next three years

Social economic analysis has looked at housing prices going forward, and sees that they will skyrocket over the next four years.

Here are some of the main points:

• House price increase of 33 per cent in Oslo over the next four years, with growth distributed as follows: 3.9 per cent this year, 8 per cent next year, 10 per cent in 2026 and 8 per cent in 2027.
• For Bergen, Trondheim, Kristiansand and Tromsø, growth of 25–26 per cent is predicted from today to 2027.
• The lowest increase is in the interior, with 19 per cent, i.e. more in line with wage growth and price growth in society. Telemark and Møre and Romsdal are also roughly the same.

– Worrying

Our salary will increase by 17 per cent in the same period (2024–2027), which means that in cities like Oslo with an increase of 33 per cent, it will be strongly felt that housing is more expensive.

– The growth we expect in the coming years is higher than in previous years, says chief economist Benedictow.

– There are many things that point in the direction of house prices rising quite a lot, such as lower interest rates, high wage growth, high population growth and too few homes will be built in the future.

– Is it good or bad?

– In Oslo it is worrying. House prices there are already very high.

– Good for owners?

– Yes, good for those inside, and bad for those outside.

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