Swedish housing market

 

The municipal authorities are responsible for providing housing for residents in Sweden. The municipally owned housing companies are the natural tool for the municipal authorities to ensure that those living in the municipalities have access to good housing. The municipal companies have continually produced housing over the years and, alongside private stakeholders, have constructed housing for all markets.

 

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Figure 1. Diagram of housing production and housing need based on the increase in population, for the period 2007 to 2013. Source: Statistics Sweden, revised: SABO
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There is significant pressure within the Swedish housing market. Much of Sweden is facing a housing shortage, primarily in its metropolitan regions. Sweden has one of the highest levels of urbanisation in the EU.

 

The level of additional new homes has been very low, while population growth has been high and, according to forecasts, this will continue. Calculations made by SABO, using supporting information from Statistics Sweden, show an acute shortage of housing. Approximately 150,000 dwellings were built in Sweden between 2008 and 2013. This should have been 276,000 considering the increase in population over the same period. In this context it should be borne in mind that the financial crisis suppressed the construction of new housing. However, regardless of reason, there is a construction deficit of 126,000 houses that need to be added to the future construction need. We also need to build a further 310,000 dwellings to match the forthcoming increase in population over the next six years. In aggregate this calls for 436,000 new homes up to and including 2020.

 

However, Sweden’s construction market suffers from very high prices, prices that from the mid-1990s have increased significantly more than general cost levels for society. Building a multi-dwelling building currently costs almost two and a half times more than it did in the mid-1990s, while other price trends were just over 30 per cent for the corresponding period.

 

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Figure 2. Diagram of price trends for the construction of new apartment blocks, and also Sweden’s general price trends in the form of the Consumer Price Index (CPI). Source: Statistics Sweden.
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According to statistics from Eurostat, construction prices in Sweden are the highest in the EU. It is approximately 70 per cent more expensive to build housing here than the European average. Only Norway and Switzerland have higher construction prices in Europe.

 

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Figure 3. Price level indices for construction, 2013. Source: Eurostat.
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