Young people entering the European housing market

[Introduction]

Thank you for the invitation. It is a pleasure to be here and to see so many dedicated people gathered in Oslo to discuss a highly interesting and relevant topic. And as Minister of EEA and EU Affairs, I am delighted to see European cooperation in action – right here in Oslo. 

Norway is not a member of the European Union, but we are certainly part of Europe, and through the EEA Agreement, we are closely integrated with the EU.

The close relations between Norway and the EU can be illustrated by the fact that around 80 % of Norway’s total exports go to the EU, and around 70 % of Norway’s imports come from the EU. Another illustration of our close relations is the fact that almost 200 000 EU citizens are currently working in Norway – many of them in the building industry.

I know that cooperation, information sharing, teamwork and discussion are keywords for this conference. I can assure you that they are keywords for Norwegian European policy as well.

We do not want to develop our policy behind closed doors. We want input from different actors in society, property owner organisations included.

You have valuable knowledge and information. You have valuable cross-border networks. You play a role in raising key concerns for Europe as a whole – like the important and highly relevant topic on your agenda today: young people entering the European housing market.

[Backdrop. Financial crisis]

Entering the housing market for the first time is often challenging. And it has become even more challenging for a growing number of young people in Europe over the last few years. The backdrop for this is of course the financial crisis that hit Europe in 2009.

Yes, we are seeing signs of economic recovery in the eurozone, but progress is fragile and there are still major challenges, not least the problem of unemployment among the young. Unemployed young people have no stable income, and as result they are often in a weak position in the housing market. This is not only bad for the young people concerned, but also for the economy as a whole. For instance, the building industry that generates so much employment and economic growth is struggling.  

A discussion of the challenges young people encounter in the housing market is therefore also linked to the broader European discussion of how can we create jobs and stimulate growth. I am glad that this question is now at the top of the EU agenda. Increased competitiveness and innovation are crucial for the future of Europe, and not least for the future of young Europeans.

[Norwegian housing market and Norwegian housing policy]  

Norway was not hit by the financial crisis to the same extent as many European countries, and unemployment rates among young people are relatively low. However, young people meet challenges in the housing market in Norway, too. Thus, I would like to give you a brief introduction to the Norwegian housing market and Norwegian housing policy.

Norway is a land of homeowners. 77 % of households own their home in Norway. This high ownership rate is no coincidence. After the Second World War, it was a stated political goal that Norwegian people in general should own their own home.  A policy that has served the country well.

The tax system has been used consciously to maintain the high rate of ownership. Interest deduction and low taxation of property encourage people to make investments in property.  

From time to time, the international media turns its attention to the Norwegian housing market – because of the rapid increases in house prices. Since the year 2000, house prices have increased by 140 %. Over the last 12 months, house prices have increased by 7.5 per cent.  It is clear that Norway’s population growth of between 1.2 % and 1.4 % a year is affecting the housing market. Most of this growth is due to migrant workers.  

Another important trend we are seeing is urbanisation. The demand for flats and houses has risen in the urban areas around the big cities.  

Low levels of unemployment, high rates of growth in wages and low interest rates have all led to a substantial increase in household debt and incomes in recent years. However, household debt has risen more quickly than incomes, and the ratio of debt to incomes is higher than ever before.  

This high level of household debt makes the Norwegian economy vulnerable to negative shocks. Thus, ten days ago the Government launched a plan for the housing market, proposing several measures to increase the supply of housing.

Under the plan, restrictions will also be placed on households’ access to credit, with a view to curbing the growth in debt.   

The Government has also taken a number of steps to simplify the rules for building permits and the building planning process. We make it easier to carry out building work without a permit, we reduce the processing time for permits, we limit the objections that can be made by government bodies, and reduce the opportunities for making repeated and time-consuming appeals. The aim is to make the regulations simpler and more predictable, and to reduce building costs. 

[Norwegian housing policy for the disadvantaged]  

Although most people live well in Norway, this is not the case for everyone. Around 122 000 people are regarded as disadvantaged in the housing market. This includes people and families who are unable to find or maintain a satisfactory housing arrangement on their own. They may be without a home, at risk of losing their home or living in an unsuitable environment. To help them, the Norwegian State Housing Bank provides favourable loans, grants and allowances, and gives information to the public.

For example, allowing low-income groups to become owner-occupiers is one feature of Norwegian housing policy. The State Housing Bank can grant what it calls start-up loans – favourable loans that provide credit for people who are unable to obtain financing from private credit institutions.

[Challenges and actions to help young people enter the housing market]

The high price level and recent regulations are having a particular impact on young people who are trying to buy their first home. They have little starting capital, and it takes time to save money. Some young people will be eligible for a start-up loan. However, Norwegian housing policy now focuses mainly on helping those who cannot help themselves in the housing market.

As a result, young people are no longer seen as a group that qualifies for special funding schemes. In order to be in the running for start-up loans, they need to have struggled to get a loan for a long time.

However, for many years now, Norway has had a special saving scheme for young people, to encourage them to save money for their first home. It offers a good rate of interest and tax relief. It has been a success, and in 2013 the Government strengthened the scheme. Personally, I benefited greatly from this saving scheme, at a time when my hair was a bit longer.

[Conclusion]  

To sum up, then, the Norwegian model has been successful in many ways. But we face challenges too, in terms of high and rising prices and household debts. And many young people are facing additional challenges in the housing market, as I mentioned.  

As you are all aware, a home is important for gaining an education, starting a family, finding a job and taking care of our health. Homes give us the basis to lead a social life and give us a sense of belonging to our local communities. Having a poor living situation, or being without a home, has major negative consequences for people’s quality of life. The main vision of Norway’s housing policy is to make sure that everyone has adequate and secure housing, and public housing policy is high on the Government’s agenda.

As I said, you have valuable knowledge and information. Your input is most welcome. I am sure this conference will serve as a useful platform for sharing experiences and finding solutions.

Thank you.