What could NZ learn from the post-war housing movement that helped shape Norway?

Norway regularly tops the United Nations’ list of the best countries to live in, leading the way on life expectancy, education and a high standard of living.

So it’s not surprising that there is a lot of interest in immigration to the Scandinavian country and Norwegians aren’t in a hurry to leave, either.

That means housing is in hot demand and Norway, like many other countries, saw steep growth in house prices during the Covid-19 pandemic.

According to OECD research, Norwegian households typically spend 18% of their disposable income on keeping a roof over their heads, below the OECD average of 20%.

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Homeownership is a priority and about 80% of the population own the home they live in. In New Zealand, homeownership was 64.5% at the last census.

The 20% not yet on the property ladder in Norway have two main options: Self ownership (selveier) or shared ownership (andel), usually through a housing co-operative.

Buying a home outright incurs a 2.5% purchase tax, similar to the UK’s stamp duty. Buying through a co-operative is cheaper, but essentially means you become a shareholder in the co-op and buy the rights to live in a specific property.

Although the purchase price is lower when buying through a co-op, it comes with significant monthly costs to covers the shared debt on building costs, interest on other loans and maintenance charges.

Norway’s co-op housing movement took off after World War II when, like many European countries, it was in desperate need of housing.

The state stepped up, offering help with low cost building sites, subsidised loans and grants, and the co-op sector built houses to be sold at cost.

That changed in the 1980s, when price regulation was scrapped, subsidised loans and grants from the State Housing Bank were phased out and local authorities stopped providing building sites.

But by the time that happened Norway’s co-op housing movement was already one of the largest and most successful in the world.

Whichever way you go – self or shared ownership – you’ll generally need at least 25% of the home’s value as a deposit, although those under the age of 34 are able to make a 15% down payment.

The capital city, Oslo, is home to Norway’s highest prices – the average there hit 6.1 million Norwegian krone (NZ$1 million) in February, pretty close to 10 times the average annual salary of 612,000 KOR.

Norwegian houses vary in size, style and layout and the single-storey properties are rare. A four-bedroom house with two bathrooms will have a floor area of around 200sqm, usually spread over two or three floors, while a two-bedroom flat will be about 80sqm.

Once you’ve saved a deposit and secured a home, there is some good news on the interest rates front.

Norway’s policy rate (the equivalent of our official cash rate) is sitting at 1.5%. As a result, the average interest rate on residential mortgages is about 2.2%, though that is expected to increase to around 4.3%, according to Norges Bank.

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

With such high rates of homeownership, Norway’s small rental sector is dominated by households who rent out part of their home, or a second property they are not using, for a limited time.

Rents range from around 4000 NOK a month for a room to more than 45,000 NOK for a large house with a good view.

In Oslo, rent averages 11,240 KOR a month, while a home in Bergen will cost about 9000 KOR.

And Norwegian landlords aren’t playing when it comes to security deposits. To lock in your pad, you’ll need to cough up at least three months’ rent but could be asked to stump up six months’ worth, as well as the first month’s rent.

However, once you’re in a rental, you can relax because Norway’s Tenancy Act prevents sudden rent hikes.

In the first three years of a lease, the rent can only be increased in line with the consumer price index, and not in the first 12 months of the agreement.

The act also protects against unannounced visits by landlords, who can only enter a property with the tenant’s permission.

And while tenant’s can end a lease in writing without reason, landlord can only do so on justifiable grounds.