Rental properties sell – Broker predicts serious price growth – E24

Rental prices remain high, but brokers believe this is just the beginning of a wild price run.

There is an apartment building near Frognerparken in Oslo that has been owned by property investor Jan Age Solid-Hansen since the early 2000s.

The building consists of 21 apartments. Sollid-Hansen has now started the process of selling the apartments one by one. He tells E24 he chose to keep the apartments until he had the money.

– Not so anymore. He says I have lost interest in doing there.

Second-hand homes, or rental homes, are now “disappearing” from the market across the country.

Rents are already at record highs. But that's not enough, brokers predicting prices will rise 30 to do 40 percent The next few years.

Too expensive for the home owner

There are fewer and fewer rental properties on the market.

A recent report by the Norwegian Association of Real Estate Agents (NEF) shows that 713 secondary homes were “missing” in Oslo in the first quarter. Oslo has 19 percent fewer secondary homes compared to 2019.

Nationally, there are now 7,188 fewer secondary homes than there were 4.5 years ago, a decrease of 1.8 per cent.

– It's going to be hell for renters, says Anders Langtindt at PrivateMcLaren.

He says he has recently been involved in selling 100 rental apartments.

Apartment building owner Sollid-Hansen describes the rental market as bad. As a result, many privately owned rental properties end up on the housing market.

Langtind presents the following calculation:

If you own a two-room flat in Oslo for five million, a good rental income today would be NOK 20,000. 20 percent tax on this income. In addition, the entire value of the home is counted as property value, which must now be taxed.

If you buy an apartment with 25 percent equity, you get a loan of 3.75 million.

With today's mortgage interest rates, if you have a 30-year repayment period, the loan alone would cost you NOK 21,344 a month. On top of this, there are other costs such as maintenance costs for the apartment and communal costs and insurance.

– Longtint says, you should earn NOK 31,200 a month.

– By renting an apartment for NOK 20,000 you lose between NOK 120 and 140,000 per year.

Therefore, he believes rents should rise by 30 or perhaps 40 percent.

– But if more people have to sell their second homes, will there be more homes on the market?

– Yes, I agreed. Many people have the benefit of owning their own home. But stillAnd it's big However: 1.2 million people rent in Norway. What about renters? What are we going to do with them?, says Longtint.

He points out that housing production is also very low, and his experience is that the rental properties that are being sold are being bought by young people with financing from the “parents' bank”.

– As you can imagine this would be socially unjust.

– We evict 20 tenants to sell rental properties, then 20 young people with parents buy apartments and move in. 20 people we threw on the street, they have nowhere to live. Rents are rising and the housing market is booming. Nothing good will come of it, he says.

– Never less profitable

Langtind finds support in NEF's report. They conclude that with the increasing demand for rental housing, the incentives to rent out secondary housing are no longer available.

In December, the government launched a so-called housing taskforce, where they are asking people who can rent homes because “refugees, students and others need rental housing”.

– A move like this would make renting out houses less profitable than it is today, says Carl O., CEO of the Norwegian Association of Estate Agents. Keeving says.

He believes the tax burden needs to be reduced if more rental housing is to come on the market.

– If the authorities want to reverse the negative trend, there should be financial incentives to encourage more people to rent secondary housing. Equalizing second homes with equity by introducing a 20 per cent valuation discount on wealth tax would be a step in the right direction, says Keving.

Estate agent Longtint estimates that thousands of flats will be put up for sale, which will push up rental prices sharply.

– I believe they will go up plus/minus 30 percent. He says they have to do that to avoid owners selling everything.