The effect of tax subsidized savings on home ownership

Mette Cecilie Fodstad Botnevik

Student thesis: Master thesis


This thesis elaborates on homeownership by looking at current research and theoretical discussion of the social and economic effects of high home ownership. It also outlines the rate of home ownership across the globe, and elaborates the development of home ownership for the respective countries. The thesis further provides reports from selected countries on existing policies with the intention to increase home ownership. The main focus of this paper lies on the country of Norway, a country with one of the highest rate of home owners per capita, and also a country with very few negative impacts that high home ownership claims to induce, while similarly having most of the positive effects of high home ownership. Norway has a unique policy scheme from where young adults receive tax deduction on savings locked for the purpose of buying a home, also known as a BSU account. The analysis is based on micro data of bank customer between the ages of 18-34 years over a time period of 10 years, from 2004-2014 in Norway. I examine whether there is a significant difference in probability of taking up a mortgage when comparing those with and without BSU account. The analysis also calculates the probability of taking up a mortgage given that you have a BSU account. The findings show that the probability of taking up a mortgage loan when having a BSU account is significantly higher than for those without a BSU account. Based on the analysis I argue that people with a BSU account have a higher probability of taking up a mortgage than those without. The highest effect is found for 30 years old male living in a non-urban settlement without significant fund savings, while the smallest are for 20 years old female living in an urban settlement without significant fund savings. The analysis does not provide enough evidence to conclude on a causal relationship, only a correlation. These results argue that this policy may help increase home ownership among the younger part of the population.This paper contributes to the debate on home ownership by looking at the success story of Norway, and the unique policy for increasing home ownership. In addition to this it adds to the debate on how policies to increase home ownership, by examining a success case from Norway. Further I elaborate on impacts for other countries and how the tax policy can be used.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2015
Number of pages74