“It’s a lie, a big lie. This with the weather, that is – that this is what we Norwegians talk about the most. What we talk about the most is housing »
This is how the book starts The Norwegian home, authored by Hannah Gitmark, Deputy Chair of the Think Tank Agenda.
Do you recognise your self?
I do. I myself recently bought an apartment in the capital, and was immediately bitten by the bacillus. You world so busy I suddenly became of housing prices, renovation, and area development.
Every time new housing price statistics are released, and the arrows usually point upwards, I hurry to the calculator to calculate how much I have earned from owning a home lately. It is extra fun if in the course of a month I have earned more by owning a home than going to work, and it does not have to be a rarity with the growth we have seen in recent years.
All my previous wishes about curbing house price inflation has ended up on the scrap heap of idealism. Now I want prices to skyrocket and pass, so that I can take part in the enormous wealth growth generations before me have had.
I have simply become quite selfish.
This is how I think many others think once they have climbed over the obstacles and entered the housing market. There is probably something quite human about it too: you think about your family and your home before you care about most other things. This in no way means that politics should reflect our greedy nature, as it does now.
If you are one of them who bought a home in Oslo ten years ago, you should get a little reminder of how huge the price increase has been since then:
Let’s say you bought an apartment for 4 million kroner. If we assume the price growth that has been in Oslo, almost a doubling in the last ten years, then it should be worth around 7.8 million now.
This means that you have earned as much as 3.8 million kroner on the home, 380,000 kroner a year, most likely without working so hard for it. The most absurd of all: you can sell the home without having to tax the price increase at all.
380,000 kroner a year is about as much as a waiter or bartender in Oslo earns. Before they have paid income tax, well note.
Although it is fully understandable that the individual wants such a tax-free money machine, it is not a tax system that makes sense. At least it’s not fair.
The combination of tax-free home sales, low property taxes, and not least that the state pays a fifth of our interest expenses, means that the large housing assistance goes to people who already have a foot in it.
Everyone who scratches on the doors must make do with crumbs. It is an inequality machine that runs at full strength, and most politicians are not willing to do anything special about it.
There are, of course, exceptions, and one of the most recent is Oslo City Councilor Raymond Johansen.
In a comment in Aftenposten he advocates the introduction of an inheritance tax to reduce the effect of an inherited inequality that has enabled housing prices to skyrocket.
He argues that when house prices grow as much as they do now, some families will accumulate large values while others are left with nothing. In addition, they can pass on these values to future generations without taxing them.
It’s a sensible suggestion, even if it is not enough to sort out the imbalances. As soon as he proposed it, it was shot down by his own in the Storting.
There is every reason to listen to Johansen, and perhaps the Social Democrats in his own party should wake up to embrace a better and fairer tax system.
Admittedly, it is not just the Labor Party that should prick up its ears. Most good economists would recommend something in this era for the Norwegian tax system: lower the tax on labor and value creation, and instead increase the taxes on property, inheritance and wealth. It is advice that should really unite both the left and the right in Norwegian politics.
All taxes are twisted. They affect the choices of individuals and companies, how we invest and what is profitable. Therefore, we must ask ourselves the question of where we can tax the least possible damage to value creation. In addition, financial redistribution should be an independent point.
If you tax work and value creation harder, then you get less of it. But if you tax property, inheritance and wealth harder, that money will not necessarily disappear.
By pushing taxation away from work and onto housing, we can have a tax system that both creates more value and does not roll out a red carpet for even greater housing inequality.
There are kinder eggs no one dares to touch. Because most people are like me, and like life as a housing speculator.
We are almost witnessing the complete absence of housing policy in this country. Eight out of ten Norwegians own their own home, and this is constantly repeated in political celebrations. Completely forgotten are those who are outside and are unable to buy a home because they do not receive financial support from home.
It may be natural, but when people become too selfish and selfish, then politics is needed. The problem is that politicians also do not seem to be able to free themselves from the sweet taste of house price growth.
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