Unlock Sweden’s housing market

One of the most vexing things for a foreigner moving to a large Swedish city – and particularly to Stockholm – is finding somewhere to live.

Rental apartments are almost impossible to get your hands on, thanks to a system in which rents are kept way below what the market would dictate, and where apartments are distributed through queues or contacts.

A report out this week from property owners organisation Fastighetsägarna showed that this system, intended to stop Stockholm turning into a segregated town, in fact has little effect on social segregation.

And if you live in Stockholm, you don’t need a report to tell you that. A trip up the blue line from Östermalm to Rinkeby will speak louder than a thousand reports. The middle class don’t live in the north-west suburbs.

There’s no doubt that segregation is undesirable, but this system is doing nothing to stop it.

But who does the system actually benefit?

Fastighetsägarna’s report says it benefits the rich. And up to a point, it’s right.

The average income of those who live in the centre of Stockholm is 25 percent higher than of those who live in the suburbs. The difference in rent is minimal – 968 kronor per square metre in the middle of town, against an average of 888 kronor over the city as a whole.

But the people it really benefits are those who are already in the system, and know how to play the game. This means principally those who have lived in Stockholm for decades, and have therefore got themselves in a housing queue or who have a good network of contacts, and therefore can bag themselves a cheap, central apartment. Not just the rich, then, but the Stockholm-born rich.

It discriminates against those who come from abroad, but also against those who move to Stockholm from other parts of Sweden, and who would never have thought to put themselves in a Stockholm housing queue ten years ago.

They are forced into buying when they would prefer to rent, or living in a succession of sub-let flats, often with a maximum lease of one year (thanks to the strange, peculiarly Swedish, distaste for sub-letting among the boards of many apartment buildings).

This discrimination against outsiders (or in favour of lifelong city-dwellers) might have been appropriate twenty years ago. But now, in an age where people are expected to move the length and breadth of the country to find work, the system just looks perverse.

And when you make it difficult for these people to move to Stockholm, putting obstacles in the way of labour market flexibility, it’s the whole economy that suffers.

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Properties in Sweden