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Greenland´s changing housing market

It is not so long ago that I was asked if, in Greenland, we were still living in igloos. My answer was no doubt rather disappointing to the questioner as I pointed out that igloos were historically known only in the most northerly latitudes of Greenland and were used only by hunters on long hunting expeditions.

For centuries, the normal dwelling in Greenland was a skin tent during summer and a peat house during winter. The peat houses were in principle "throwaway houses", as they would normally only be used for one winter due to the nomadic lifestyle of the Inuit.

This pattern changed quite quickly after the first permanent colonial settlement in the 18th century. Drawings from the early 19th century indicate that the traditional one-winter-only peat houses had been turned into more permanent dwellings, always in close proximity to the colonies of the missionaries and the trading company.

Throughout the 19th century and during the first half of the 20th century the traditional peat houses were gradually transformed into small wooden houses. A standard house for the Inuit family at the beginning of the 20th century was a single-roomed, single-storey house with a layer of wooden boards, which acted as walls and an inclined roof, which created room for storage. For insulation, these houses had a thick outer wall made in the traditional way with layers of peat and flat stones.

Until the start of Greenland's intensive modernisation period in the 1950s, Inuit housing was almost exclusively a 'do-it-yourself' initiative, but this was soon to change dramatically. The age of modernisation emerged after 1950 with the Danish Government's formation of the public authority Grønlands Tekniske Organisation (GTO). At that time Greenland was still almost 100% administrated from Copenhagen. The GTO was in charge of orchestrating the transformation of Greenland's infrastructure from that of an archaic, colonial museum into a modern, streamlined society. Very important here was the decision to create up-to-date housing. This was to be developed in two parts. For the approximately 75 smaller settlements, the GTO constructed a set of new houses with proper insulation, wooden floors and windows.

This was a huge step forward. The people for whom these houses were meant were unable however to provide any financing of their own. Therefore, loans, which did not need to be repaid for thirty years were introduced. Although the system had seemed to work well for decades, it was ultimately concluded that those who were unable to pay the loan at establishment, were unlikely to be able to pay it thirty years later. Subsequently most of these loans were simply written off.

For most of the 19 towns, the strategy used was somewhat different. A town was defined as the major inhabited area in each municipality. All other inhabited places within the municipalities were defined as settlements. The number of municipalities changed little in these years. In the towns, blocks of flats with running water and modern toilets were built during the 1950s and the 1960s. Through this, the majority of the inhabitants in the towns became tenants in the state-owned modern housing developments. Rents were kept artificially low, as a majority of tenants would simply not be able to pay market rent.

During this period and through the 1980s, emerged a small group, mostly Danes and members of some of Greenland's upper class clan families, gaining huge wealth. Some of this wealth was put into large, private houses of some 200 square metres, which constitutes a luxury house in Greenland. In all of Greenland's towns, specific areas are dominated by a few such houses in the smaller towns and up to fifty plus in Nuuk. Ever since the 1950s there has been and indeed there remains a small and highly lucrative market for these houses. Supply and demand for these luxury houses has more or less been in balance since the early 2000s.

People living in these houses include successful entrepreneurs, shrimp trawler owners, directors in the state owned organisations, top civil servants, and politicians. Thus, their wealth comes from very different sources, and this group of citizens with high incomes does not share much except their taste for more luxurious surroundings in their everyday lives. At the end of the 1980s, a new economic reality began to emerge. Previously the state had owned almost 90% of all houses on the transferable housing market aimed at the middle-income groups. The system was however proving to be simply too expensive to maintain and had to be changed.

The new system focused on the housing co-operative. Here the middle-income group could become house owners – with a little help from Home Rule. Of paramount importance here was the fact that building maintenance was no longer the responsibility of the public administration. The Home Rule government supported the establishment of cooperative ownership with up to 50% of the costs financed through special loans.

At the beginning of the new millennium, a new and financially stronger middle-income group began to dominate the housing market in a number of towns, and most visibly in the capital, Nuuk. Here for the first time a whole area was established with only privately owned houses and flats operating more or less on market terms.
The process of developing a growing housing market operating, more or less, on market terms is expected to be replicated in the four new 'administrative' towns, one in each of the four municipalities created in 2009, and perhaps in a few other villages.

It is impossible to say whether the housing bubble in Greenland will burst. If it does, it will impact a large group of middle-income citizens, but it will probably not really affect the exclusive little group of housing matadors, who have benefited enormously from the housing boom aided by the Home Rule system.

Looking beyond Greenland, it is striking to observe the current state of the housing market in, for example, the high north of Canada. In Nunavut and in Nunavik the housing market structure shows remarkable similarities to that of Greenland some 40 or 50 years ago. It will therefore be interesting to see how the housing market in these parts of the Arctic will develop in the years to come.

Photo: Rasmus Ole Rasmussen

Klaus Georg Hansen

Deputy Director and Senior Research Fellow