Billions more needed to rid housing shortage

A national government agency has estimated that another 19 billion kronor ($2.81 billion) are needed to "build away" Sweden's housing shortage every year.

Billions more needed to rid housing shortage
Newly built row houses in Ulvsunda outside Bromma in Stockholm, October 2008

Although 35,000 new homes are needed every year to address the shortage, but only 28,000 are being built, according to the National Housing Credit Guarantee Board’s (Statens Bostadskreditnämnd, BKN) report “What would it cost to build out the housing shortage?” published on Wednesday.

The board is a national government agency under the Ministry of Finance. It publishes a market report three times a year in February, May and October.

The board’s estimate is based on a return to normal interest rate and 20 percent lower housing prices. Currently, about 115 billion kronor are invested in per year in homes.

Soaring production costs are the biggest threat to building, the agency said. In the report, the agency singled out the development of future interest rates and housing prices as having more of an impact on the housing market than demographics.

“Our calculations show that the last decade’s sharp increase in prices for houses and condominiums has very little to do with population growth and an inadequate shortage of construction. The calculations show that the driving forces behind the price increase is primarily lower interest rates and increased household incomes,” the report explained.

Together, these factors explain about 70 percent of the rise in

housing prices over the last decade. The remaining 30 percent is due to changing household expectations on future price developments and reduced property taxation.

The last decade’s construction has been strong enough to counteract the effect on prices on population growth. According to the report, Sweden’s population grew 80,000 in 2009 and the increase is expected to be large again this year.

At the same time, housing prices have risen sharply and despite a favourable investment climate compared with the 1990s, investments in housing in Sweden remain lower than in other countries and in Sweden during the 1960s, 1970s and 1980s.

The number of completed apartments is about half of that before the crisis in the 1990s, but the majority of building is taking place in large metropolitan areas. Half of all the apartments built in Sweden are multi-unit residential blocks in Stockholm.

The high housing prices means that those who want to buy a home must finance such a purchase with loans to a greater extent than before. As a result, those who have a fixed income and already have a home to mortgage have an advantage over others looking for housing.

“A housing shortage in the narrow economic sense does not exist, just as there is no shortage of other goods and services in a market where price determines supply and demand,” the report said.

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INTERVIEW: International students ‘vulnerable’ to Swedish housing shortages

People moving to Malmö to study now have to wait as long as a year to receive accommodation, Milena Milosavljević, the president of the Student Union in the city, has told The Local. The situation, she says, is "urgent and acute".

INTERVIEW: International students 'vulnerable' to Swedish housing shortages

The Sofa Project, run by the Student Union Malmö, received 80 applications this year from students who wanted to rent short-term accommodation, showing just how acute the current housing shortage is.

These 80 applicants were vying for one of seven spots, ranging from a spare room to a sofa bed – from hosts who sign up to offer their spaces to new arrivals.  As the programme only had seven hosts registered this year, the project had to close its application page to others, otherwise the number would have surpassed 80.

“They are ready to come to Malmö and sleep on a sofa bed at a stranger’s house before they find accommodation,” Milosavljević told The Local. 

Malmö recently received a red designation from the Swedish National Union of Students, which publishes an annual report assessing the housing situation in university towns and cities across Sweden. A red designation means that finding suitable accommodation as a student takes more than one semester. The report found that 61 percent of students live in a city that has been designated a red ranking.

READ ALSO: Sweden’s student union warns that housing shortages are back this semester

“The reality of Malmö and the reason why it became red is that to find suitable accommodation you have to wait up to a year,” Milosavljević said.

Some individuals, she said might have to wait up to three years to find their own accommodation, making do with second-hand contracts, long commutes, and living with family members in the meantime. For newly-arrived international students, who lack personal numbers when they move here and so cannot join Swedish housing queues, looking for suitable housing becomes a complex task.

“International students are more vulnerable because they don’t have a personal number to enter the system before they come to Sweden,” Milosavljević explained.

Milosavljević herself moved to Malmö as an international, fee-paying student. Because she paid tuition, she was offered housing by Malmö University. Based in part on her own experience, Milosavljević explained that the housing issue cannot be reduced to a shortage in the number of flats and rooms. There is also a shortage of appropriate housing options for different needs.

“They offered me accommodation in a student building,” she said. “Not an apartment, but a room – and I came with my husband. The room was not enough for two of us.”

Student accommodation must accommodate the different needs of different members of the student body, Milosavljević said, including those who move with partners or spouses, or even with their children.

In the past year, one new student apartment building was built in Malmö, with 94 new spaces for the city’s student body. This is inadequate, Milosavljević said. While Malmö is growing, and there is residential construction being carried out around the city, it is unclear how many of those new buildings will prioritise the city’s student population.

The city’s student population, too, is growing. As the pandemic era ended in Sweden, students returned to campus. And new students joined them. While student ranks grew, housing options remained stagnant.

“From our perspective from the Student Union, we have talked about, in the previous years, how the situation after the pandemic is going to get even worse for the students,” Milosavljević said. “There’s an increase of students coming back, new students, and already not even enough housing.”

Milosavljević has fielded calls and emails from students who say that they cannot move to Malmö because they cannot find housing.

“They are already working on it,” Milosavljević told The Local of the university’s response.

There are plans to create more housing for international students, but these proposals focus mainly on students from European Union, leaving other international students out. All international students should be given priority for student accommodation, Milosavljević said, because none of them have access to the Swedish housing market.

“I do believe strongly that the City of Malmö and Malmö University need to have urgent negotiations and start building straight away,” she said.

Because Malmö University is a public university, it must follow the lead of the Ministry of Education and Research. Milosavljević acknowledged that in the aftermath of Sweden’s recent elections, which put the right-bloc in power, student housing shortages might not rank highly on a list of national priorities.

“The Student Union Malmö considers this situation quite urgent and acute,” Milosavljević said. “We are more than prepared to sit down and talk so we can actually do something, instead of just having meetings. The students will continue to suffer if the living conditions and the bostad [housing] situation in Malmö is not improved.”