Recent figures from Eiendom Norge reveal that that the holiday home market in Norway has experienced a downturn in the first half of 2023, bringing us closer to pre-pandemic normalcy. The number of sales has declined by 10.7% nationwide, and several factors contribute to this decline. An important factor is the interest rate hikes by Norges Bank to combat increased inflation, along with a weak Norwegian currency. These rate hikes have influenced potential buyers, making them more cautious about investing in a holiday home.
Mountain cabins are less affected
The location and type of cabin play a significant role in the extent of the price decline. According to the statistics from Eiendom Norge, mountain cabins had an average price of 3,366,455 NOK, which corresponds to only a 3.1% decrease compared to 2022. This decline in average prices can be partly explained by the increased supply of newer cabins in the mountain cabin market, as well as strong growth over the past 10 years that peaked during the COVID-19 pandemic.
Despite the overall market decline, there is still demand for the more expensive mountain cabins. Sales of cabins in the price range between 5 and 10 million NOK and over 10 million NOK have increased significantly. This suggests that those with higher incomes continue to invest in vacation homes, and that the more exclusive cabins retain their value better.
Attractive destinations and new trends
Some destinations defy the downward trend. According to Bergens Tidende, average prices increased by 12.2% in Geilo to an average price of 5.28 million NOK, while in Voss municipality, the sale of cabins remained stable with a 0.3% price increase to an average price of 4.03 million NOK.
Furthermore, the rise in interest rates, along with the impact of rising inflation, and the prevailing economic situation, have also contributed to the decline in cabin sales, reducing the attractiveness of owning a cabin that remains largely unoccupied. Many potential buyers carefully consider the costs associated with buying and owning a vacation home, including operational expenses and maintenance costs. This has led to an increasing interest in shared ownership as a more economically favorable solution.
Shared ownership of holiday homes, offered by companies like &Hamlet, has become increasingly popular as an alternative to buying and owning an entire property alone. Shared ownership provides an opportunity to own a larger and more luxurious cabin at a significantly lower cost. By sharing expenses with other owners, costs are reduced while access to better amenities is ensured, with a sustainable and socio-economic focus.
Experienced business operators, like Tinde Hytter, report that there is light at the end of the tunnel for the holiday home market. Although challenging times, history has shown that the property market has always recovered after downturns and is one of the safest places to invest your money. When the good times return, there will be opportunities for both buyers and developers of holiday homes.
Despite the decline in the holiday home market, it also presents new opportunities. By carefully considering market trends, individual needs, and alternatives like shared ownership, one can find a solution that best suits one’s desires and finances.
Please note that figures and statistics referenced in this article are based on information from Eiendom Norge and may be subject to changes and updates.