Scandinavian Countries Residential Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

Key Highlights

• The Residential Real Estate Market in Scandinavian Countries is expected to grow at a CAGR of more than 5% during the forecast period. The coronavirus (COVID-19) outbreak has had a wide range of impacts on the Scandinavian housing market. As economic activity in the countries has slowed down, consumer confidence in the economy has drastically decreased. The limitations on activity and financial status imposed by the state of emergency influenced banks, real estate brokers, and clients leading to a decline in the home sales and sales timeframes.
• Scandinavian countries are growing rapidly and are projected to be among the fastest-growing region in Europe in the future. Rising house demand has not been matched by construction over a long period due to taxes, regulations, and lack/mismatch of incentives. However, the increase in population and immigration is expected to bring growth in the housing market in countries such as Sweden and Norway.
• The EU bank EIB has signed a SEK 2.5 billion (USD 235.5 Million) loan agreement with the City of Stockholm to support energy-efficient housing. This investment will help provide 1500 new energy-efficient residential housing units in the Swedish capital. The City of Stockholm and surrounding municipalities is home to nearly 25% of Swedes. It is also the largest urban agglomeration in the Nordic region. Increasing the stock of new public rental housing in existing urban areas, like in the capital of Sweden, will improve the social mix in Stockholm, a city that has been growing rapidly. Thereby, building these more than 1500 residential units will promote affordable housing.
• New figures from Statistics Denmark show that construction of 8,703 homes was completed in the 4th quarter 2021, when adjusted for season, which is a decrease of 4% compared to the previous quarter. This brings the total number of completed residential buildings to 34,897 in 2021. The slightly more subdued development in 2021 must be seen in the context of the fact that it has continuously become more expensive to build new homes throughout the year 2021.
• Currently, Denmark’s strategy for sustainable construction is based around a voluntary standard, but it enters a new phase in 2023. With this strategy, Denmark is the first country to introduce embodied carbon limits into building regulations. Taking into account that approximately 11% of global CO2 emissions result from manufacturing building materials, this is a crucial step for decarbonising the built environment.

Scandinavian Countries Residential Real Estate Market Trends

Growing Housing Market in Norway to Drive the Market

Norway's housing market is making a return after a poor performance in 2020. According to Statistics Norway, the first three quarters of 2021 saw a 3.6% increase from the previous year. In the first half of 2022, residential property sales in Norway fell by 8.9% to 41,275 units from a year earlier, in contrast to y-o-y increases of 6.8% in 2021 and 3.6% in 2020, according to Statistics Norway. Construction activity remains weak. In 2021, dwelling stats rose by a minuscule 0.7% y-o-y to 30,126 units while completions dropped 2.6% to 28,398 units.

In 2022, house prices in Norway have been turbulent, with some months showing a rise and others a dip. According to the statistics, the average price for a home in Norway was NOK 4,535,711 (USD 430,570) at the end of September 2022. House prices in Norway are easing due to interest rate hikes implemented by the nation’s central bank since September 2021. Property owners and first-time home buyers have been hit by a double whammy of high inflation and rising interest rates. The latest rate hike implemented in November 2022 took rates to 2.5% in Norway - a sharp rise from a record low of 0% present just over a year ago.

Increase in Demand for Apartments

In the first half of 2022, 8,644 owner-occupied apartments were sold in Denmark, down a third from 2021’s tally of 12,947 flats sold by that time. The figure is also slightly down on the number of apartments sold during the first halves of 2019 and 2020. The last year which saw fewer apartments sold during its first six months was 2014. In contrast to the villas and summer houses, fewer newly built owner-occupied apartments were completed in 2021 compared to the previous year. There were 13,520 completed apartments, with a total of 15,386 new ones added in 2020.

In Veidekke has been commissioned by Nesgata 19 utvikling AS (a joint venture by OBOS Nye Hjem and Otto Olsen Boligutvikling) to build the second tranche of housing in the Kvarteret residential project in the town of Lillestrom. The commission is a design and builds contract worth NOK 248 million (USD 23.9 Million) excluding VAT and will entail the construction of 84 eco-certified apartments and an underground car park.

Skanska has divested a multi-family rental project with high climate ambitions in Stockholm, Sweden, for about SEK 580 Million (USD 54.6 Million). Skanska is developing the Tora project, next to Spanga commuter train station, in the emerging new Bromstensstaden. The block consists of 145 rental apartments, of which ten are LSS homes for people with special needs. The project has great focus on minimizing climate impact. Skanska’s green concrete, which has a halved climate impact compared to regular concrete, as well as solar panels on the roofs are examples of measures that contribute to lower emissions.

Scandinavian Countries Residential Real Estate Industry Overview

The residential real estate market in Scandinavian countries is competitive. Competition and pricing have increased strongly as new investors and developers have entered the market. Moreover, both the demand and supply of real estate are increasing. The residential real estate market consists of regional and international players. Some of the key players operating in the market include Riksbyggen, Fastighets AB Balder, Danish Homes, Dades AS, and Veidekke ASA.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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