More and more young people are dependent on parental help to buy a home – E24

More than two out of three first-time buyers had to have financial help to enter the housing market in Oslo in 2023. Meglertopp believes there is a need to change the lending regulations.

67 per cent of young home buyers in the age group 20–29 years received parental help in Oslo when buying a home in 2023, according to statistics that the Norwegian Real Estate Brokers’ Association (NEF) has been commissioned by Statistics Norway and processed by Samfunnseconomics Analyse.

In the rest of the country, the proportion was 48.9 per cent.

In Oslo, the proportion in the age group 20-29 who have received parental help when buying a home has increased from 51.4 per cent in 2015 to 67 per cent in 2023, the statistics show.

– With today’s house prices and interest rates, many people will struggle to buy their first home. Our analyzes have documented that many first-time buyers adapt either by moving out of pressured areas or by buying with someone else in order to be able to afford to buy in pressured areas. New figures now show that a very high proportion of home buyers in Oslo get help from their parents to get into the housing market, says Carl O. Geving, managing director of the Norwegian Association of Estate Agents.

Advances on inheritance or gifts were the most important form of parental assistance in Oslo in 2023. Previously, security/guarantees were the most common, according to NEF.

In the rest of the country, security/guarantee was the most common form of parental assistance, with 29.1 per cent of the cases.

– Creates a marked difference

Between 2015 and 2023, house prices have increased by around 42 per cent nationally and by 58 per cent in Oslo, according to NEF.

Geving points out that in areas of the country where housing price growth has been strongest, many families have built high housing wealth through value appreciation and repayment of loans.

– Housing assets are passed on for generations. In order to help their children enter the housing market, many wealthy parents use free capital to give their children a gift or an advance on an inheritance. This has a particularly strong impact in Oslo, and creates a marked difference between young people who do not have to save up equity and can manage with lower loans, and young people who are dependent on earning more and saving more because they do not have access to parental assistance, says he.

The Norwegian Association of Real Estate Agents believes that the lending regulations, which are to be revised in the autumn, should enable banks to offer housing loans without high requirements for equity to loan applicants with good serviceability.

This is on the basis that the borrower commits to risk-reducing solutions such as long fixed-rate contracts or the purchase of insurance against house price falls.

– Paying off your own mortgage is an effective form of saving, while paying rent is pure consumption that reduces the household’s ability to save. Today’s lending rules place too much emphasis on equity and banks’ mortgage security, and too little emphasis on the borrower’s ability to service debt. Households with good debt servicing ability should be given the opportunity to build a secure financial future through ownership of their own home, without being dependent on parental help, says Geving.

Prices are rising

House prices have risen in the first months into 2024. In January, house prices rose by 3.4 per cent nationally, while in February they rose by 1.4 per cent.

On Thursday, the house price facet for March will come, when Eiendom Norge presents fresh statistics at 11.00.

Chief economist Kjersti Haugland at DNB Markets told E24 on Monday that she expects the upswing we have seen earlier this year to slow down.

She believes that the level of interest rates – which economists believe has reached the ceiling – is now actually beginning to be felt in most people’s wallets.

– This has a bit of a bite on the bidding rounds and dictates how far people stretch, says Haugland, but adds:

– There are forces pulling in the opposite direction as well, while the supply side has been tight. New home sales have been down for a long time and this has helped to keep up house price growth, together with a very good labor market, the chief economist states.

House prices in Norway rose through the first part of 2023, before the trend turned downward in the autumn. Last year ended overall with an increase of 0.5 per cent. It was thus the weakest year since 2017.