– It's important to save smart – E24

– It's important to save smart – E24

Ole Ravna (29) lives in a 33 square meter apartment in Grunerloka. The chief economist believes that the youth will have poor purchasing power in the future.

Ole Ravna (29) is cutting back on expensive vacations and social activities to save money for housing.
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He bought the apartment in 2023 without parental help for about NOK 3.9 million.

– For those who don't have a wallet, it's important to save your wits, says Ole Ravna.

Statistics from the Norwegian Association of Estate Agents (NEF) show that 67 percent of young home buyers aged 20-29 received help from their parents when buying a home in 2023.

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– Live simply even if you get a good salary

Ravna is a trained computer engineer and has been permanently employed for the past three years. Before studying, he saved some shares through BSU (Polyksparing for you). But getting a loan to buy a house in the capital is not enough.

Several savings measures eventually made the home dream possible.

– I prioritized what was right for me. While I was saving up, I chose to rent own a house rather than live an expensive lifestyle, she says.

BILLIC: During the austerity, Ravna still lived as a student.

He admits that paying rent alone can be expensive, but believes it's possible if you cut back on expensive items and travel. For Ravna, it is important to live simply even with a good salary.

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– He says that I can allocate a significant portion of my income for savings.

A computer engineer advises youngsters to think long-term to realize their housing dream. He believes you can build equity quickly by making the necessary sacrifices.

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Salary of almost million

After his studies, Ravna started with an annual salary of NOK 500,000. Two years later, his income increased to NOK 800,000, which enabled him to meet the requirements for both income and equity.

– I saved NOK 20,000 to 30,000 a month. On average, each month was NOK 25,000. He says.

The annual BSU limit of NOK 27,500 makes it difficult to build equity quickly enough.

– Early on I understood the need for more storage systems, says Ravna.

After filling BSU and BSU+, he put his savings balance in savings account and mutual funds.

– Although mutual funds are generally not ideal for short-term savings, it worked for me, says the computer engineer.

While good savings practices are important, Ravna believes that a good salary was decisive for buying a home.

– I consider it a great privilege to have a good salary, which made it possible for me to enter the housing market, he says.

Read on E24+

A large number of luxury homes are available for sale

– The purchasing power of the youth is low

First house codeFirst house codeThe statistics show the proportion of homes that a typical first-time buyer can afford, based on income, interest rates and mortgage terms. NBBL shows that it has become more difficult for young people to enter the housing market. On a national basis, purchasing power has declined from 39.5 percent in 2010 to 14.2 percent in 2023. Figures for 2023 show that young people in Oslo will be able to buy 3.1 percent of homes, up from 39.8 percent in 2010.

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Hilde Mitchem, Chief Economist of the Norwegian National Association of Housing Builders (NBBL).

NBBL's Chief Economist Hilde Caroline Mitchem believes this growth will continue.

– In the coming years, the purchasing power of the youth is expected to decrease. Home prices are rising faster than wages, so first-time buyers should stretch further to afford a home, he says.

For many, that means their dream home is still a long way off.

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Jonas (27) received housing assistance from his parents

Have a buffer

Karsten Bill, private economist and Hoosiern policy leader, has been inspired by Ravna and has some solid advice for others looking to realize their housing dream.

One of his advices is to save in a BSU account. He believes this type of storage is a good alternative for several reasons.

– Interest on deposits, tax exemptions and better loan terms from banks are some of the benefits. As a general rule, the borrower should keep 15 percent of the loan amount in the form of equity. But banks can waive this quota if you save over time, says a private economist.

Carsten H.  Biel is a lawyer by training and has extensive work experience in personal finance.

He also advises keeping a buffer, meaning extra money for unexpected expenses.

– There are always additional costs when buying a home. He says you should read the escrow statement carefully and make sure you have more money down than the home is worth.

Besides, Pihl says, living outside the city center can save a lot of money.

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– There is a high demand for living in the center and this increases house prices. But those who can tolerate a bit of travel can buy a home at a lower price, he says.

Joshi Akinjide

Joshi Akinjide

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