Author Description

Housing affordability can have an impact on housing demand. We analyse housing affordability by measuring the distribution of selling prices in the housing market against the distribution of household capacity to debt-finance a home. The latter is calculated based on household debt-servicing income, banks' residential mortgage rates, principal payments and debt-servicing capacity requirements. When calculating debt-servicing income, ordinary consumption expenditure is withdrawn. Household wealth and equity are not included. For large groups of households, affordability has remained stable over time, in spite of higher house prices. Housing affordability varies with interest rate changes and with income growth and house price in ation. In Oslo, developments in affordability have been relatively weak in recent years compared with other cities and Norway as a whole.