Naive economics question for you, Twitter! I’ve been traveling in Scandinavia, where cost-of-living seems weirdly skewed: cheap-ish real estate, expensive meals and goods (relative to SF).
In other places I’ve traveled, these usually correlate, but not here. What gives?
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I don’t think “high tax welfare states” alone explain it: many things are >50% more expensive than in SF, but VAT and income tax differences wouldn’t explain that. And average rent is less than half SF’s. (c.f. numbeo.com/cost-of-living)
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one reason real estate is expensive is access to capital, when it’s harder to get a loan (as it is in many countries), people have to pay cash so prices are depressed. i’ve seen this in austria
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Lots of food gets imported (weather not being conducive to growing much!) plus sales tax (25%-ish IIRC) keeps prices high. Low population density probably keeps housing relatively cheaper.
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The high rate of importation makes sense, but aren't many restaurants currently leaning towards using locally grown produce, etc?
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Policies vary across Scandinavia, but to take Sweden for example rent control has essentially limited increases to the inflation rate, but there’s a 15 year waiting list in places like Stockholm. Buying to rent is also pretty much impossible.
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Wow, I had no idea! Fascinating. Even the for-sale real estate prices seem quite cheap relative to SF: any ideas there?
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Strong unions and openness about salaries and high social mobility makes wages higher in service sector. Tax incentives for owning own housing, but less so for second house, makes owning more attractive than renting.
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Where is that cheap-ish real estate? “Stockholm is the second most overvalued property market in the world, behind Toronto”
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Ah! I’m not sure I saw prices in Stockholm, but I did in Helsinki, Oslo, Copenhagen.