Homebuyers revolt over down payment hike

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11:02 CEST+02:00
Property buyers have asked Prime Minister Jens Stoltenberg to snub a recommendation from financial oversight officials to hike the minimum down payment on a property by five percent to 15 percent of the purchase price.

OBOS and NBBL — buyer “club” and home-buyer advocacy organization — have stated in a joint letter read by The Local, that hiking up-front costs to buyers will mean fewer building starts and higher prices.

“The new Financial Supervisory Authority of Norway (Finanstilsynet) guidelines will create even greater social segmenting in the housing market,” the letter said.

The organizations furthermore argued that the initiative would lead to further pressure on the rental market.

“The well-to-do will have the means to buy homes while the others will be referred to a steadily more pressed rental market".

For years, ordinary Norwegians could be assured an early bid on a property by joining one of the organizations, a modest advantage in a country where the rich had historically been able to quietly put in offers on homes not yet built.

But the government has been looking for ways to curb the soaring property costs experienced in recent years and raising the required down payment is seen as one alternative.

Raising the down payment is however argued to target first-time buyers without property of their own to earn proceeds from. Meanwhile, a dearth of building starts has driven the price of a 50-square-metre flat in downtown Stavanger to 2.2 million kroner ($390,000).

When it published its guidelines in September, the Finanstilsynet met little opposition for what it said was necessary action to combat Norwegians’ high debt levels and ensure “financial stability”. The home-buyers’ collective letter to the prime minister is the first real resistance to the move, although the government had seen the idea as a way to dampen buyer enthusiasm and drive down runaway home prices.

Norwegian property millionaire Ivar Koteng told business daily Dagens Næringsliv (DN) Tuesday that he thought a complete lack of affordable housing was creating today’s housing shortfall and driving prices artificially up. He called for more regulation for “capitalism to serve society”.

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“It’s a societal problem that there isn’t enough housing in and around the big towns,” said Koteng, adding, “there are no affordable housing starts in Norway today.”

In their letter to Stoltenberg, OBOS — an organization that has fought for housing for it members since a 1920’s housing shortage — suggested the financial community alone had been consulted.

“Important players in the building sector — housing associations, builders, the building industry and realtors — have not been consulted."

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