The news came from Prime Minister Fredrik Reindfeldt, talking at a conference in Almedalen on Thursday.
He said the 20,000 flats, planned to be built before 2020, would "modernize the whole of Sweden" in a move that would also create around 13,000 jobs up until 2035.
The prime minister also announced plans for a new metro station in Stockholm between the Tekniska Högskolan and Universitetet stations – areas mostly populated by students, at an estimated cost of 1-2 billion kronor.
But one political expert, Niklas Bolin, was unimpressed by the proposals.
"As I see it, the Moderates are losing the election in September, and they realized they needed to do something and quickly," the Lecturer in Political Science at Mid Sweden University told The Local.
"I'm not sure how the Swedes will react to the plans, but these kind of long-term proposals seldom have short-term consequences when it comes to elections."
He added that historically, especially in Europe, parties don't last longer than two mandates anyway, and that the Moderates won't be able to do much to counter a 10 to 15 percent poll lead by the Social Democrats.
"The Alliance has proved strong in the past with all the important questions from healthcare to educaction to the economy. But now, they've lost a handle on all this. Pretty much everything's out of their favour now."
Reinfeldt, meanwhile, has been working hard lately making promises to the Swedes. On Wednesday, he announced plans to to build a further 100,000 new homes across Sweden – at an estimated cost of 400 billion kronor ($59 billion).
The plans were aimed to promote Sweden's growth over the next 20 years as part of a "Construction Sweden" campaign (Sverigebygget), and include a serious pumping of funds into long-term investments for jobs, housing, traffic, and railways.
The 100,000 new homes across the country are expected to be finished by 2035, which will be part of the main plan by the government to have five million Swedes working by 2020.
The funding will be carried out "responsibly", the government said in a statement online, by user fees, the local governments nationwide, and private investors.
Reinfeldt will be holding talks to the public in the Almedalen park on Thursday evening.
The political week wraps up on Sunday, with party leaders from the Left Party (Vänsterpartiet), Liberal Party (Folkpartiet), and Centre Party all set to take the stage respectively in the coming days.