I paid 365 kroner for my first OBOS apartment in 000: 1988 square meters on Rodeløkka in Oslo. 56 years and a divorce later, I sold the apartment for 10, stayed true to OBOS, but this time in Oslo west, for 975 million kroner. Today, the apartment is valued at 000 million. For a period, the loan interest rate was 1,8 percent, now I am down to 7 percent. I am not a speculator, but hope for my own part of the bottom does not go out of the market. After all, I have a debt of about 17 million. Maybe the bank actually owns my home? Not unlike many others.
In Norway, there is broad political agreement that owning one's own home is good for people and countries. But now both politicians and economists are afraid that we have made ourselves too vulnerable to the effects of major economic fluctuations. Also: About 20 percent of the population is outside the housing market. And at a time when some inherit more than others, and house prices only increase, the economic and social dividing lines in society become greater. Is there anything to do with this?
Need a new housing policy?
Hannah Gitmark, professional advisor with responsibility for working life and finances in the think tank Agenda, believes that we need a new one housing policy in Norway and has just as well written a very readable book on the subject. Through 250 pages, the current situation is analyzed. We also get a review of housing construction in Norway throughout history, before the author concludes with concrete proposals for a new policy. The book is supported by good secondary literature, statistics and interviews with researchers and politicians. Different arguments take place, and it appears to be unmoralizing, which is a strength.
It is no coincidence who is outside the housing market. Those who earn the least are also the ones who own the least.
That we need a debate book on housing policy seems obvious as we soon enter an election year. The author writes that between 2003 and 2019, house prices have risen by 163 percent. In the capital, the increase has been three times as high as wage growth. This means that the path into the housing market for those who are outside is becoming increasingly difficult. They miss out on a safe and long-term housing relationship and the financial benefits of owning a home, including tax subsidies from the government – which in reality is a transfer from those who have the least, to those who have the most. It is no coincidence who is outside the housing market. Those who earn the least are also the ones who own the least.
A blind spot?
It is paradoxical that our society, which is characterized by a heavy emphasis on precisely egalitarian values and broad welfare schemes, allows the housing sector to be governed to such an extent by the market. It benefits those who already have a home, through low taxation of the home and favorable deduction schemes. Since house prices rise most in the big cities, in the long run an increased inequality in housing wealth will also make it difficult for people from the villages to settle in the cities.
At the same time, debt growth among Norwegian households is greater than income growth. Today, we Norwegians have debt of as much as 232 percent of disposable income, Gitmark writes. "Consequently, we owe on average more than twice as much as we earn. This is very high both in a historical context and compared to other OECD countries, where the debt burden has been reduced in recent years. " This can be devastating for the country's economy in the long run.
The author points out that education, health, pensions and housing together make up what we call the four "welfare pillars". She problematizes the fact that there has been broad political agreement that we should stimulate people to own themselves, and that we have therefore planned to subsidize homeowners' loans, while tenants do not benefit from similar support schemes. This has led us today to see tendencies for housing to become a much more speculative object than before.
On the way to a stool again?
Historians have shown how speculation can lead to disaster. Gitmark refers to the book Bankruptcy – Norwegian financial crises, where the historian Trond Gram tells about advertisements printed in Aftenposten in the 1890s with reference to plots such as «safe speculation» and «beautiful and advantageous».
A plot of land on Alna was bought for 24 kroner in 000 and sold four years later for 1894 kroner. Gram describes how a new class of speculators emerged, which ended with the famous Oslo crash in 300. We also saw something similar in the late 000s during the Jap era, when several Norwegian banks went bankrupt, and many homeowners were forced to sell at a huge loss.
Are we heading for a stool again? Maybe not too bad, but debt and underlying financial turmoil should be flashing warning lights. Gitmark attributes the current challenges in the housing market to two political measures: the Willoch government's abolition of price regulation on share flats in 1982, and independent housing associations. The deregulation of the housing market led to homes going from being distributed to the one who stood first in the queue according to a waiting list principle at a fixed price, to being sold to the one who came with the highest bid. A couple of years later, the credit markets were also deregulated, thereby increasing the supply of loans. Gitmark discusses the arguments from that time, is balanced in his interpretations and does not give the Willoch government any unequivocal "blame" for this. Many in the Labor Party were also in favor of the mentioned measures.
But it is not always easy to see the consequences of a new policy. The home must be an object of use and a welfare benefit for the citizens. Today, it may seem as if the market value of the home has become more important to many than the use value, as Fritt Ord leader Knut Olav Åmås has said in an article in Aftenposten. And it is a timely warning: The purchase of secondary and tertiary housing has skyrocketed.
Taxes and fees
There are solutions, writes Gitmark, and comes up with three main proposals. The first is perhaps most controversial: "Norway must have a new tax policy." Gitmark wants the indirect subsidy of those who own, to life. This means both property tax and the reintroduction of the inheritance tax. (How will the Labor Party's program committee relate to this nut?)
The second is perhaps less controversial, but involves several dilemmas: We must facilitate increased settlement around hubs, we must build higher, perhaps even sniff at the land boundary and use allotment gardens to build new ones. Here, a city like Oslo is well underway. But it has created a lot of noise, and tall buildings also have many negative sides – demolition of gardens as well. But the debate is important, and Gitmark gets all sides involved.
The third proposal is exciting, and inspired by what is happening in cities like Copenhagen and Vienna: a more social development. This is often referred to as "the third housing sector". Among other things, this can be done in new models for smooth transitions from renting to owning.
The market and politicians have made us a nation of homeowners. Some of us have come out of it well, but the market is not able to distribute in a fair way. Gitmark's book comes at the right time and will influence the debate leading up to the next parliamentary election.