What can New Zealand learn from the post-war housing movement that helped shape Norway?

Norway consistently tops the UN’s list of the best countries to live in, leading to a high life expectancy, education and quality of life.

It is therefore no surprise that the Scandinavians have such an interest in immigration and that the Norwegians are in no rush to leave either.

This means that the demand for housing is high and that Norway, like many other countries, experienced a sharp increase in house prices during the Covid-19 pandemic.

According to a study by the Organization for Economic Co-operation and Development, Norwegian families typically spend 18% of their disposable income keeping a roof over their heads, below the OECD average of 20%.

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Home ownership is a priority and around 80% of people own the home they live in. In New Zealand, home ownership was 64.5% at the last census.

There are still 20% of property ladders in Norway with two main options: self-ownership (Mrs.) or joint ownership (Share), usually through a housing cooperative.

Buying a house outright pays a purchase tax of 2.5%, similar to UK stamp duty. Buying through a co-op is cheaper, but basically you become a partner in the co-op and buy the rights to live in a particular property.

Although the purchase price is lower when purchased through the co-op, it comes with significant monthly costs to cover joint debt on construction costs, interest on other loans and maintenance fees.

Most buyers need a 25% deposit to buy a home in the world's most livable country.

Pamela Wade

Most buyers need a 25% deposit to buy a home in the world’s most livable country.

The cooperative housing movement began in Norway after World War II when, like many European countries, it needed housing.

The government stepped up its assistance to build low-cost construction sites, subsidized loans and grants, and selling houses at cooperative sector prices.

When price controls were liberalized in the 1980s, loans and grants subsidized by the state housing bank were canceled and local authorities stopped providing construction sites.

But at that time the co-operative housing movement in Norway was already one of the largest and most successful in the world.

Whichever path you take – self-ownership or shared ownership – you’ll usually need a deposit of at least 25% of the home’s value, although people under the age of 34 can pay a 15% down payment.

The capital, Oslo, has some of the highest prices in Norway – an average of 6.1 million Norwegian kroner (NZ$1 million) in February, almost 10 times the average annual salary of 612,000 Swedish kroner.

Norwegian houses vary in size, style and layout, and single-storey properties are rare. A four-bedroom, two-bathroom house is about 200 square meters, usually spread over two or three floors, while a two-bedroom apartment is about 80 square meters.

If you save a deposit and get a house, there is good news about interest rates.

The policy rate in Norway (equivalent to our official cash rate) is 1.5%. As a result, the average interest rate on residential mortgages is around 2.2%, although it is expected to rise to around 4.3%, according to Norges Bank.

Reserve Bank of New Zealand

Adrian Orr, president of the Reserve Bank, talks about the bank’s forecast that house prices will fall by 20% from their peak.

Meanwhile, New Zealand’s OCR was raised to 2.5% last month and mortgage rates are already close to 5.5%.

With such high home ownership, the small rental sector in Norway is dominated by people who rent a part of their home or other property that they do not use for a limited period of time.

Rents range from around 4,000 NOK per month for a room to 45,000 NOK for a large house with a good view.

In Oslo, the average rent is 11,240 SEK per month, while the price in Bergen is around 9,000 SEK.

Norwegian landlords don’t mess around when it comes to security deposits. To close your block, you will need to pay at least three months’ rent, but you can ask for six months’ rent and the first month’s rent.

However, once you rent, you can rest easy because the rental law in Norway prevents sudden rent increases.

During the first three years of the lease, the rent can only be increased according to the CPI, not during the first 12 months of the contract.

The law also protects against unannounced visits by landlords who can only enter the property with the tenant’s consent.

While tenants can terminate a lease without written reason, the landlord can only do so on reasonable grounds.

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