Norway: booming housing market and increasing small-scale landlordism

Abstract

The key features of the Norwegian housing system are a large homeowner sector; high real house price increases in recent years; a private rental sector dominated by small-scale investors; and a residual social rental sector. Even though Norway has a generous welfare benefit system, the housing sector is relatively market-oriented and housing policy is modest in terms of benefits and social housing provision. Favourable taxation, a long period of historically low interest rates, and a rental sector not considered a good alternative, have maintained a high demand for homeownership, along with high and rising house prices, and very high household debt. However, homeownership among young adults and low-income households has fallen, with a consequent increase in the private rental sector. Small-scale private landlords dominate the rental market and have increased in recent years. The rental sector is characterised by lower quality housing, short-term contracts, market-based rents and an increasing affordability problem for tenants.