In urban areas such as Oslo and Viken, many spend more than 30% of their income on housing, highlighting a serious affordability issue.
Despite its strong economy, Norway is grappling with a growing housing divide. A new report reveals how housing is becoming increasingly unaffordable for vulnerable groups, such as students, immigrants and low-income renters.
Soaring housing costs
While most households in Norway can manage their housing costs, vulnerable groups - particularly students, immigrants, and private-market tenants - face increasingly unaffordable rent that eats up more than 30% of their disposable income.
This housing cost overburden is a key indicator used by researchers to understand the severity of housing affordability crises. When housing costs exceed 30% of income, it’s a clear sign that people’s finances are being stretched too thin.
Recent data shows a sharp increase in the housing cost overburden rate in recent years, especially in urban areas such as Oslo and Viken. Urban researcher Rebecca Cavicchia explains that this trend points to a housing market that is becoming increasingly difficult to navigate for large sections of society. "Without targeted policy interventions, these inequalities are likely to deepen," she warns.
Decline in homeownership
Homeownership in Norway has been steadily declining since 2003, dropping from 83% to 79%. While owning a home remains the norm, rising housing prices – particularly in cities – are pushing more people to the rental market.
This trend is not unique to Norway. The United Kingdom saw homeownership fall in recent years, largely due to rising housing costs and a shift toward private rentals. In France, homeownership has plateaued at 58% since 2013 as high real estate prices create financial barriers for younger generations. Similarly, Spain has witnessed a shift toward renting, particularly since the 2008 financial crisis.
The findings highlight the need to rethink the regulation of the rental market in Norway, which in comparison to majority of the other countries studied in this research, offers weak protection and stability to tenants.
“This trend across multiple European countries underscores a structural shift in housing markets, where rising costs, financial constraints, and changing economic conditions are making homeownership increasingly unattainable for younger and lower-income households,” explains Cavicchia.
The dream of owning a home is becoming more elusive for younger generations and lower-income households.
Government funding cuts contribute to the crisis
The report also highlights a significant decline in public investment in housing. Since 1995, government expenditure on housing has remained below 1% of total public spending with investments in public and community housing consistently shrinking.
“The reduced government commitment to housing investment has contributed to a shrinking supply of affordable housing,” says urban sociologist Roberta Cucca. “This lack of public support disproportionately affects lower-income groups who can’t rely on social and subsidized housing options.”
Energy challenges and the green transition
Norway’s push for a greener, more sustainable future has seen a 75% reduction in CO₂ emissions from the building sector since 1970. However, rising electricity prices and global energy instability have made it even harder for low-income households to keep up.
“The push for energy-retrofitted housing must go hand-in-hand with affordable housing,” says Cucca. “Otherwise, we risk a situation where sustainable urban policies benefit wealthier homeowners while excluding renters and low-income groups.”
What needs to be done?
The researchers urge immediate policy reforms to address these growing housing inequalities. Their recommendations include:
- Expand public and affordable housing to counteract the growing reliance on the private rental market.
- Amend rental regulations to ensure stability, regulate short-term rentals and prevent excessive cost burdens on vulnerable groups.
- Integration of housing policies and green transition initiatives to ensure equitable access to sustainable housing solutions.
- Address regional disparities by increasing support for affordable housing in high-demand urban areas.
Cucca underscores the importance of aligning urban green policies with affordable housing initiatives: "Policymakers must ensure that good-quality housing remains accessible for all, particularly in urban centres where affordability is under pressure. This is an important aim of the new European Affordable Housing Plan, which will be soon defined by the EU. It is something we are closely monitoring through this research."
The report is part of the EU research project Reducing Housing Inequalities (ReHousIn), which explores housing challenges across nine European countries, including Norway.
Source: National report on housing inequalities – Norway | ReHousIn