Rent Control Buckling Under Market Pressure, Sweden Increases Development

A housing affordability case study, provided by the unique housing policies in the country of Sweden.

August 26, 2021, 12:00 PM PDT

By James Brasuell @CasualBrasuell


AndreasPinacci / Shutterstock

Maddy Savage reports from Sweden, where the country's nationwide rent control laws are failing to keep rents in line with the needs of the country's young population.

The country has been championing rent controls since World War II, according to Savage, along with laws that allow "collective bargaining between state-approved tenant and landlord associations."

But a "shortage of accommodations" in Stockholm and other Swedish cities "is causing a major headache for young Swedes," according to Savage.

Here's how the country's housing program works: "anyone can join a city's state-run queue for what Swedes call a 'first-hand' accommodation contract," according to Savage, and "Once you have one of these highly-prized contracts it's yours for life."

"But in Stockholm, the average waiting time for a rent-controlled property is now nine years, says the city's housing agency Bostadsförmedlingen, up from around five years a decade ago." Moreover: "This wait-time doubles in Stockholm's most attractive inner-city neighbourhoods."

To summarize: "Regulations designed to prevent owners from making long-term profits are also fuelling market instability."

What's Sweden's solution? They're building more housing. "Between 2015 and 2019, Stockholm gained 83,000 new homes, with construction increasing at an 'unusually high' rate, according to Länsstyrelsen, a state-run body which connects municipal and national authorities."

More on Sweden's unique housing policies and the country's real estate market, as well as comparisons to the rest of Europe, are included in the source article linked below.

Wednesday, August 25, 2021 in BBC

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