Online to the point These are comments written by Nettavisen’s editor-in-chief.
In five years, the processing time has increased from 1,436 days to 1,908 days in Oslo from 2016 to 2022.
Throughout this period MDG’s Hanne E. Marcussen was city councilor for urban development, while Raymond Johansen (Ap) was city council leader.
– When the case processing time increases, it leads to fewer pre-regulated homes and the housing reserve with ready-to-build plots is reduced, writes project manager Erling Røed Larsen in Samfunnskokonomis analise in a report that analyzes the costs of delays in housing projects in Oslo.
The report has been prepared on behalf of the Norwegian Housing Association (NBBL) and the Spekter Employers’ Association.
Here are the most important points
Here is a summary in ten bullet points of the report on delays in housing projects in Oslo:
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Increase in case processing time: The processing time in Oslo has increased from 1,436 days in 2016 to 1,908 days in 2022, which reduces the number of pre-regulated housing and plots ready for construction.
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The effect of a reduced housing reserve: A large housing reserve can be a buffer against delays, but in Oslo, where the reserve is small, delays lead directly to lower housing construction.
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Costs of delays: A one-year delay in housing construction in Oslo costs society NOK 1.2 billion temporarily, and a permanent delay costs NOK 23 billion.
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Calculation of delays: The analysis is based on a stylized calculation where 3,500 homes are delayed by one year each year, which reduces the housing stock accordingly.
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Types of delay costs: Identified cost types include developer costs, labor market travel costs, productivity costs, and household costs related to location attributes.
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Scaling of costs: The report scales costs from a project of 1,000 homes up to normal annual housing production in Oslo and further to permanent delay.
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Methodological limitations: The report delimits itself from estimating gains (such as agglomeration gains) and other costs (such as congestion costs) for existing households.
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Influence on the labor market: Delays affect both travel costs and productivity in the labor market, with complex effects depending on whether people change jobs or commute.
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National Implications: Although the focus is on Oslo, the methods and results can be generalized to other Norwegian cities with similar situations.
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Proposed measures: Discussion on solutions to reduce the gap between the actions of individual caseworkers and society’s welfare gains, with a focus on pay, incentives, and practice.
Summarized using artificial intelligence, edited by the editors.
House prices in Oslo are rising, and the city has the country’s shortest selling time, according to Eiendom Norge.
The forecasts show that the population will increase, but there is a large backlog in building new homes.
Higher construction costs from more expensive building materials and high interest rates make housing developers sit on the fence.
The new report shows that slow case processing in the municipality also costs billions.
Social economic analysis has calculated the effect of a normal annual production of 3,500 homes being delayed by one year. If there is a permanent delay that spreads further in the years to come, “it means that society will incur costs amounting to NOK 23 billion”.
You can read the full report here: Costs of delays in housing projects
The developers get a lot of the bill
So who has to bear these losses? The answer is that they are distributed among many parties, but that the developers – i.e. those who own the plots and intend to build on them – lose around NOK 170,000 per home, or close to NOK 600 million.
- In plain language, this means that the buyers must pay NOK 170,000 more than necessary for the developers to make up for this loss due to slow case processing.
- But ordinary people also lose, in that they have to commute further to work because the homes they demand are not built. The report estimates that it costs people somewhere between around NOK 40 and around NOK 120 million a year.
- In the next round, it also spreads to the labor market’s productivity, and it costs a new just over NOK 100 million a year.
- The biggest loss, however, is for ordinary people, as they are not allowed to live where they want to live. Here, the social economist estimates a loss of NOK 375 million in the event of a temporary delay, and as much as NOK 7.5 billion if the delay becomes permanent for a number of years to come.
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Applies to the entire country
Although the report is based in Oslo, the author believes that the same method for calculating costs applies to the whole country, and especially in regional centers where there is demand to move to.
The statistics clearly show that house prices are highest where many people have high incomes, and there is reason to assume that high incomes are connected with great value creation. People want to live where they get well-paid jobs, and when housing becomes scarce, prices rise – naturally.
What must be done?
The processing time for housing regulations is now approaching 2,000 days in Oslo. It is well over five years, and such delays are of course absolutely horrible and unacceptable.
Ordinary people can be imposed daily fines or other punishments if they do not follow the deadlines we receive from the public authorities, while the municipality allows new housing projects to age before they receive a stamp of approval.
The processing time must be reduced. That can only happen if the bureaucrats’ discretion is reduced and the entire case management is digitalised. There is a big job to do here for the new city council in Oslo.
Tags: Oslo Case processing time MDG city council spent years regulating housing
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