The cost of living: Home ownership is high in Norway

Chart: Michael A. Rogers
Norway is near the top in its rate of home ownership.

M. Michael Brady
Asker, Norway

Housing is an increasingly urgent contemporary social issue in Norway. The prime question of the day is how can young people afford a place to live, given the high cost of home ownership? Financial pundits often point to the prevalence of owning as opposed to renting housing. Just after Christmas, Aftenposten, Oslo’s and the country’s leading newspaper, made the issue a front-page feature, headlined (in translation): “While Norwegians are obsessed with buying their own housing, renting is usual in the rest of rich Europe” (References).

The connotation of that headline and similar analyses is that the rate of home ownership is greater in poorer countries, such as Romania, with the highest rate of 96.4% ownership, and less in wealthy countries, such as Switzerland, with the lowest rate of 44.5% ownership. Though these data reveal the home financing preference of a country, alone they don’t explain why it exists.

Many countries with high percentages of home ownership were in the former East Bloc. After the fall of the Soviet Union, the combination of sweeping privatization of formerly state-owned apartments and of relatively large shares of the population living outside urbanized areas made owning one’s home the norm. Wealthy countries with low percentages of home ownership usually have personal income tax practices that differ from those in Norway, in which mortgage interest is a deductible item on income tax returns, and there’s no tax on profits realized in sales of used residences. In short, Norwegian income tax rules encourage home ownership.

Other influences also are at work. Social mobility is high in Norway as it is elsewhere in Scandinavia (References). But geographic mobility, the measure of how the population moves over time, is not exceptional. This may be due to the affinity for one’s roots being as evident within the country as being Norwegian does internationally. A regional dialect remains part of a person’s identity, as does the affinity for one’s barndomshjem (childhood home).

Nonetheless, home ownership is declining in Norway, as from 84.4% in 2014 statistics to 82.8% in 2015 statistics, the figure shown in the bar chart here. Contemporary housing market analyses suggest that younger people, who may move often, find ownership of housing an inconvenient constraint and consequently prefer to rent their homes.

References:
• “Mens nordmenn er besatt av å kjøpe egen bolig, er det helt vanlig å leie i resten av det rike Europa” (While Norwegians are obsessed with buying their own housing, renting is usual in the rest of rich Europe) by Øystein Langberg, Aftenposten, Dec. 28, 2016, link: www.aftenposten.no/verden/Mens-nordmenn-er-besatt-av-a-kjope-egen-bolig_-er-det-helt-vanlig-a-leie-i-resten-av-det-rike-Europa-611475b.html

• Eurostat, Distribution of population by tenure status, type of household, and income group, last update Nov 17, 2016, link: http://ec.europa.eu/eurostat/web/products-datasets/-/ilc_lvho02

• United States Census, Annual Statistics 2015, Table 14 of Housing Vacancies and Homeownership, link: www.census.gov/housing/hvs/data/ann15ind.html

• “Opportunity of social mobility great in Scandinavia,” The Norwegian American, August 28, 2015, link: www.norwegianamerican.com/opinion/opportunity-of-social-mobility-great-in-scandinavia

This article originally appeared in the March 10, 2017, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.