Sweden experiencing 'worst property construction crisis since 1990s'

The new figures show that the level of new builds in Sweden is at the lowest level in ten years, dropping 50 percent in the first quarter of 2023 compared to the same period a year previously.

Anna Broman, an expert in property policy at the Swedish Construction Federation, Byggföretagen, has called for a crisis commission.

"We are in the worst crisis since the 1990s. Property building rates are going to drop by more than half in the space of two years," she said.

In 2021, around 70,000 homes were built, with that number expected to drop to 25,000 this year, according to the Swedish Construction Federation.

The Swedish National Board of Housing, Building and Planning, known in Swedish as Boverket, is expecting around 30,000 properties to be built this year. At the same time, 180 of Sweden's 290 municipalities said in this year's property market questionnaire that their property markets as a whole are running at a loss.

"It's very clear that we're seeing the brakes being slammed on, both regarding the rate at which properties are being built and the sale of new builds," Boverket property analyst Hans-Åke Palmgren told Swedish news agency TT.

"It could take a worryingly long time before we see the market recovering. The situation affects young people and the level we're at is much lower than what's needed."

"We lost a whole generation of construction workers [in the 90s]," said Anna Broman from Byggföretagen. "We need to learn our lesson so that doesn't happen again. If the downturn is allowed to go too far, it will take a very long time to get the labour back into the industry."

This could also affect the green transition, Broman argued.

"Those most affected by this are young adults and other groups who need to get onto the property market. But this also affects all of our new industrialisation – the green transition – in Norrland. How can we get labour onto these sites if there aren't any homes?"

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Sweden's property minister, Andreas Carlson, claimed that the worsening conditions to a great extent are related to outside factors.

"It's due in large part to external factors related to rising interest rates, inflation and increased energy prices," he told TT.

"Then we have structural issues too. These issues have been deprioritised for a long time."

In the short term, he said, the government can help by lessening the impacts of inflation and the economic effects on Swedish households.

"In the longer term, we want to increase access to ground suitable for building, increase the motivation to build and increase the possibilities of home ownership. There is in general a wide level of agreement on what the issues are, and we have support in parliament for carrying out these measures," he said.

There have been many proposals for encouraging the building of new property. Removing the amortisation requirement, investment support, free market rents and subsidised housing are some examples mentioned in debate.

Carlson does not believe the latter suggestion would be particularly effective.

"We believe expensive housing subsidies are ineffective and not the way forward. What we need is structural reform."