Jacob Christensen

One thing which is slightly surprising about Sweden is that the place does not have a housing policy. Neither do any of the political parties: The Social Democrats have a rent control policy, the Conservatives and Liberals a privatisation policy and the Christian Democrats – well – some kind of completely misguided populist tax relief policy. But no actor has considered the bigger picture.

To make a long and depressing story short: Since the 1940s Sweden has applied a kind of Soviet style price control on rented housing. The result has been over-demand – or under-supply, if you want – and lots of imbalances on the housing market. In the mid-1960s – a period of rapidly increasing affluence and economic change – things got so bad that the government had to do something, anything, to relieve the deficit in construction. The result was Miljonprogrammet, aimed at producing roughly one million homes during a ten-year period.

The programme was a partial success: It did produce one million homes, but as the effects of rent control was never considered and demand started to shift from apartments to houses, Miljonprogrammet failed to effectively counteract tendencies to urban segregation. And so, Rinkeby, Hammarkullen and Rosengård entered our everyday vocabulary.

Since the 1970s, housing has been discussed but never addressed in any comprehensive way by politicians. The Social Democrats have stuck to the belief that rent control will produce integrated cities, while the centre-right parties are convinced that privatising public housing will be embraced as enthusiastically by tenants in the suburban “ghettos” as it was by high-earners in central parts of Stockholm who were able to buy their apartments at knock-down prices during a boom in house prices.

The latest round in this not-too-inspiring case of not-housing policy has been the debate over the possible abolition of rent controls and the social goals of public housing in favour of a completely earnings-driven model for public housing companies. The centre-right government, prompted by a complaint to the EU by private landlords, is sort-of-promoting this line while the Social Democrats and the Tenants’ Association complain that abolishing rent control will cause massive rises in monthly rents and create segregated cities.

But there is one issue which everybody keep dodging. You see, unlike in a lot of other European countries, the Swedish population is growing and there are large demographic changes going on leading to a population flow away from the countryside and smaller towns to the big cities. But are homes being built?

No. (Well, almost no)

First, take a look at the figures for completed homes in Denmark since 1981. If you know just a little bit about Danish economy, you will note how construction follows the economic cycles. The 1980s boom which ended in 1987 was followed by a massive slump during the 1990s – remember that there is likely to be a 2-3 year lag in construction – but from the late 1990s construction has picked up, no doubt driven by the economic boom and massive increases in house prices.

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Sweden is a completely different affair. In the wake of financial deregulations, construction went completely haywire in the late 1980s before collapsing in the mid-1990s. And by collapsing, I mean collapsing. Sweden is still catching up on a massive slump in construction and, as I said above, at a time when the population is growing and the cities expand massively. Maybe it is about time that someone starts considering a two-million home programme instead of concentrating on distributing rents to those who have benefited from the rent controls?

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Some Swedish blogs about the rent control issue – mostly from a free-marketish perspective: Ekonomistas I, Ekonomistas II, Niklas Jakobsson, Niclas Berggren.

Recommended reading: Paul Krugman and Robin Wells on price controls. Those in a hurry might want to take a look at the box on top of page 88.

PS: Please don’t bug me about writing appartments. I’ve noted it. I still haven’t learnt to use a spell-checker in Excel.

PPS: I’m not completely sure that Statistiska Centralbyrån and Danmarks Statistik use the same categories and haven’t bothered to check so the figures for (single-family) houses and apartments may not be immediately comparable.

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