Svenska Dagbladet discusses an interesting development on the Swedish housing market: The risk/chance/possibility of rented housing becoming extinct in Sweden’s major cities.
First, we should note that rented housing in Sweden is governed by a Soviet bloc-like system of regulation where council housing sets the price for rented housing and rents in council housing are determined after negotiations between council housing companies and the Association of Tenants (if you rent an appartment, you are automatically a member). Rents should also follow the so-called utility value system – another element right out of the USSR.
This has had two effects: First, private entrepreneurs have stayed out of rented housing. If you want to make money as a developer, villas and condominiums have been to way to go. Second, attractive rented flats have become the object of a tusk economy – and if you first have a cheap, attractive flat, you stay there. Unless…
Unless the government decides that everybody for ideological reasons ought to own their own housing and allows local councils to sell off council housing. Between 1998 and 2002, the Social Democratic government and the right-wing local council in Stockholm were locked in a fascinating conflict, where the council sold attractive property below market value while the government furiously tried to stop the moves.
Following the 2006 elections, things are much simpler. The government and the Stockholm local council have the same composition, the government has the promotion of home-ownership as one of its primary goals, and the housing market is not just hot. It’s burning. So throwing the remaining housing on the market will be a guaranteed success – after all tentants in attractive houses will be looking forward to huge profits on their flats, and tenants in unattractive housing estates will know that the local council only wants to get rid of them.
As rent controls have effectively sidelined private landlords and as the government is abandoning subsidies for construction, the only losers are those who have to enter the housing market and those who for one reason or the other have to move to Stockholm, Gothenburg or Malm÷.
But the really strange twist to the story is that the Stalinist policies introduced by the Social Democrats combined with the abolition of housing subsidies, a centre-right government and a housing boom could very well kill of rented housing in Sweden in 5-10 years’ time.
The next big question is how the abolition of rented housing goes with the demands of a flexible economy.
Oh, and Frankfurter Allgemeine questions whether owning your own house is really such a good idea.