A thesis about how unintended consequences of financial stability regulations together with a declining interest rate, and urbanization affect equity restricted first-time buyer’s ability to buy a dwelling.

House prices in Norway have increased during the last 30 years. This price increase may have several causes, including a secular downward trend in interest rates. Some have argued that “higher house prices have made it harder for young households to buy a dwelling” or similar statements. There have also been arguments about the distributional consequences of higher house prices. In this thesis we will investigate whether and under what conditions such statements may be true. To the extent house-price increases have been caused by lower interest rates, we show that the distributional consequences to a large degree may be due to unintended consequences of financial-stability measures such as loan-to-income ratios and equity requirements. We then empirically estimate whether house price changes in different areas have been due to decreasing interest rates or other factors such as urbanization. With these results we will get a better understanding of the distributional consequences of changes in house prices