I have been told also that if you go a bit further from the city it gets even worse!

Maybe you have a point about "personal space", but I don't think your hypothesis that low population density generally causes "anxiety to talk to strangers".

When there are several kilometres to the nearest neighbour, it's dead natural to stop up and talk with each other if one meets, even if the person one meets is a total stranger. Actually, just go out in the Oslo-forest, by feet or by ski, on a day or on a place when there aren't too many people, and it's natural to say "hello" to every person passing, and if there are really few people around, one would quite often one would stop up and chat for a minute or two. Or go out in the fjords by boat, we quite often wave to each other when passing on the fjord (just not when there are too many boats at the same place).

I remember our first crossing over "open" sea, from Kristiansand to the north-west coast of Denmark, it was a pretty lonely journey, and with no wind that day it was a pretty long journey too. Close to Denmark we met another boat. And of course we waved and some person at the other boat waved back. Distance too big to say anything, but still - after not seeing any other boats for so long (well, not really that long - but anyway, our longest single lap up until then) - it felt like such a heartwarming wave.

At the other hand (and I've covered it in a blog post) I really had a feeling of being lonesome when staying in Copenhagen without the family for one week.