Introduction

The key features of the Norwegian housing system are a large homeowner sector, with sustained real house price increases; a private rental sector (PRS) 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. Low interest rates, increasing incomes, favourable taxation and a rental sector with poor housing conditions that appears not to provide an attractive alternative, have maintained a high demand for homeownership. However, increasing affordability problems have caused a cautious political commitment for affordable housing and a rental sector with long-term contracts and rents below market rent, as an alternative to the market-based housing sector.

This chapter begins by presenting the main features of Norwegian housing policy in the context of the country’s welfare regime and political economy more generally. It explores the dynamics and change within the PRS in relation to other tenures and the development of the housing market. Housing finance, subsidies, regulation and tax policy are also discussed. Further sections analyse developments in relation to the composition of the rental market, the secondary property market, housing conditions and rent levels. The chapter then takes a deeper look into characteristics of the tenants in the rental market in relation to the homeowner market. The chapter ends with an analysis of effect of the COVID-19 pandemic on the housing market and the PRS.

Housing policy in context

Type of government and welfare state regime

The Norwegian economy, often referred to as welfare capitalism, has a mix of free market activity and government intervention, and a closely integrated welfare system. Norway is part of the Nordic welfare state, also classified as the social democratic welfare model by Esping-Andersen (1990). Key characteristics of this model are comprehensive, public-financed and universalistic benefits; corporatist coordination with three-party cooperation between the state, and the main employer and employee organisations; and egalitarian outcomes. Income from petroleum activity, with heavy state ownership, puts Norway in an exceptional position compared to other countries.