High housing prices, low property tax in Norway

High housing prices, low property tax in Norway

Housing prices rose again in Norway last month, to a level that now even worries real estate brokers. Homeowners and buyers, though, enjoy among the lowest property taxes in the world and politicians seem reluctant to raise or even impose them any time soon.

Property taxes in Norway include the value of a home. It’s considered stiff, at 2,5 % of the amount of the purchase price, and never before has the state collected so much on it, given the hot real estate market.

Overall housing prices in Norway, which have risen faster than those in other OECD countries, rose again in August and are now an average of 8,1% higher than in August of last year. The latest rise is once again linked to historically low interest rates and heavy demand.

Several economists think the state should impose higher property taxes, both to cool down the housing market and make it easier for first-time buyers to afford a home, and to raise state revenues.

"But home ownership is sacred in Norway, and low property taxes have been a mantra in Norwegian politics since World War II", - Professor Ola Grytten at business school told. He worries, though, that the low property taxes add to speculation in the real estate market that drives prices "artificially high and makes it difficult for people to enter the market".

Professor Ole Gjems-Onstad at business school also notes that property taxes are a sensitive issue and prompt anxiety because their size isn’t related to individual income or liquidity. "Therefore some feel they’ve lost control", - told Ole Gjems-Onstad.

Source: http://www.newsinenglish.no/2012/09/04/high-housing-prices-low-property-tax/