House prices are ‘unnecessarily’ high

Faroese house prices have increased significantly more than in the other Nordic countries.

Since 2015, house prices have risen by 70 percent in the Faroes, compared to increases of 10 percent in Finland, just over 30 percent in Sweden and almost 40 percent in Denmark in the same period.

“The main problem here in the Faroes, especially in Tórshavn, is a severe shortage of building land,” says Fróði Magnussen, chairman of the economic council.

He believes that some municipalities are doing a good job of developing land for building homes, but this is not the case for Tórshavn municipality. The result, he says, is a big supply/demand gap which pushes the prices up to unreasonable levels.

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“House prices are starting to stabilise now due to high interest rates and the consequences of Russia’s war in Ukraine, but unless the shortage of building land is solved, house prices will remain unnecessarily high,” he says.

“Developing building land is not an expense for the local councils, so it is hard to understand why this problem has become as big as it has.”

Magnussen believes that since very few people can afford to buy a house at the current prices, the consequences are far-reaching.

“This may force many, especially young families, to move out of the country. Students may also be reluctant to move back home after graduation. An ultimate long-term consequence could be that the Faroes turn into a class society.”

Read the Faroese version of this article here.

More Faroese News in English.