Sweden's housing market: structural challenges · Ta bort bilden genom att markera den och trycka på Delete-tangenten. Lägg till en ny bild genom att klicka på ikonen i mitten

Sweden's housing market: structural challenges

Hanna Aspegren

DG Economic and Financial Affairs

European Commission

Stockholm, 23 October 2018

Supply side characteristics:

Construction aspects:

• Construction costs?

• Zoning and planning processes?

• Competition in the construction sector?

Rental market:

• Limitations of utility value system?

• Rental market reforms?

• Taxation aspects biased towards ownership?

Use of current housing stock:

• Capital gains tax capping removal chain?

• Limited availability of rental units drive young and urban households to over-indebtedness?

Construction aspects: high construction costs

Source: European Commission (Eurostat)

Price level index for residential construction

Construction growth reaching an inflection point?

Source: European Commission (Eurostat)

Residential investment as % of GDP in Sweden and EU peers • Since the crisis in the 1990s, construction steadily edged upwards with an average of roughly 20 000 completed dwellings per year over 1994-2012.

• After a peak in 2017 at

51 000 completed dwellings, (49 percent rental units and 51 percent tenant-owned) levels are now expected to come down (10% drop in housing starts in H1 2018 compared to H1 2017).

Housing starts versus projected need

Source: Boverket, Statistics Sweden

Housing starts, including net conversions, versus projected need

Labour productivity in construction

Source: European Commission

Labour productivity in construction sector, Sweden and selected EU countries

Rental housing supply

Source: Boverket, Statistics Sweden

Cumulative change in rental housing stock in Greater Stockholm

Relative indebtedness of households

Debt-to-income ratio for different groups of mortgage borrowers (September 2017) (*)

Source: Riksbank; Statistics Sweden (*) Based on disposable monthly income excluding tax-free income sources such as child allowance

Thank you for your attention!

Affordable housing in Sweden

Hans Lind

Formerly at KTH

How to evaluate the housing situation?

• How easy is it to find any rental housing with a relatively low rent (less than 30% of low income after tax, appr 4500 SEK/month)?

• How easy is it to enter the suburban ownership market?

– Can you get a loan

– Can you afford 1-2% amortization?

Observation

• Serious problems today in all cities with 50 000 people or more

• ”Housing shortage”, defined in terms of ”cannot find housing easy at reasonable terms”

– Insider - outsider

– Weaker - stronger

Why important to do something?

• General welfare, freedom

• Aspects related to labour market and higher education

• Avoid an increasing black market and an increasing black economy

Fundamental explanation

• Supply (in whatever form) has not increased in line with demand

• Supply has only targeted higher income groups, which was rational up to around 2005.

What to do?

• State has to reduce ”national interest”

– Must trust local decision-makers about trade-offs

• Municipalities has to increase supply of land and plan to target different income groups

– Forced by the state?

– Forced by the market (by the state)?

Social housing?

• Defined as rents below normal level and accessible only if low income

• Might be necessary until supply has increased enough

• Might be necessary if want to reduce segregation in areas that is popular among high income groups

Is new housing policy likely?

• Against:

– Large majority has no problem with their housing situation

– Difficult to change role of municipality

• For:

– Historical tradition to co-operate and solve serious problems

– Necessary if welfare state as we know it shall survive

Sweden’s Housing market: Structural Changes

October 23, 2018

Bengt Hansson

On the face of it – no problem!

1,8

1,9

2,0

2,1

2,2

2,3

2,4

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DE FI NO SE DK IRL US ES AUS UK

Average number of inhabitants per dwelling

1,5

1,7

1,9

2,1

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2,5

2,7

2,9

1960 1970 1980 1990 2000 2010

Average number per dwelling in Sweden, 1960 to 2017

Housing construction performs well

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2000 2005 2010 2015

Ind

ex 2

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5=1

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Index of completed dwellings

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DK

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IRL

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Strong housing demand in Sweden

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2000 2005 2010 2015

Ind

ex

Real house prices

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AUS

FRA

DK

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DE

UK

US

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IRL

ES

The Swedish Construction industry performs the best

-30

-20

-10

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-40 -20 0 20 40 60 80 100 120

Ch

ange

in t

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DP

Change in real house prices

The reaction of housing investment ratios to changes in real house prices, between 2000 to peak year

AUS

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NO DK

DE

US

IRL

UK

ES

FRA

FI NE

-80

-60

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-60 -40 -20 0 20 40 60

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ange

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Change in real house prices

The reaction of housing investment ratios to changes in real house prices, after the financial crisis

AUS

SE

CA

NO

DK DE

US

IRL UK

ES

FRA

FI

NE

Housing is becoming more affordable

0,60

0,70

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0,90

1,00

1,10

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1980 1985 1990 1995 2000 2005 2010 2015

Rents in rental apartments and houses to disposable income per capita

New Old House

1,2

1,3

1,4

1,5

1,6

1,7

1,8

1995 2000 2005 2010 2015

Rents in new houses to existing rents

Excess supply of housing

Housing shortage

Monthly average rents in Sweden 2017

1 room and kitchen 3 rooms and kitchen

Subletted owner-occupied apartment % %

Sweden 10660 172 13200 95

Greater Stockholm 13243 186 15920 110

Greater Göteborg 7421 81 12800 89

Greater Malmö 6765 60 10960 49

Municipalities with > 75000 inhabitants* 6437 71 10000 50

Municipalities with < 75000 inhabitants* 4961 48 8080 32

Subletted rental apartment

Sweden 7544 92 9638 43






Rent per apartment in new buildings

Sweden 6053 54 9975 48






Rent in rented apartment

Sweden 3921 0 6759 0






*Excluding metropolitan areas

Source: Boverket, Statistics Sweden and Valueguard

The housing crisis is self-inflicted.

Housing construction and investment not a problem

• The supply elasticity in Sweden perhaps the highest in OECD

On average quite a number of houses.

But. Substantial ”lock in” effects.

• Rent regulations

• To high capital gains tax and to low property tax

• Interest rates deductions make borrowing to attractive

• Households are overindebted due to a weak amortization culture

Prices of houses and owner-occupied apartments at unprecedented levels

• Difficult to get a loan unless substantial equity

There is an affordable housing problem

• Low-income and young households cannot access entry-level housing

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Beskära bild:

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2. Nu kan du redigera hur bilden ska bli beskuren genom att dra i de vita hörnen alt flytta runt bilden i rutan.

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Valfritt: Ändra färgton på bild


1. Klicka på knappen Färg långt till vänster i verktygsfältet.

2. Välj en färg under Ändra färg i listan.

Alla tillgängliga färger utgår ifrån SABOs eget färgschema.

Affordability seminar 23.10.2018

Susanna Höglund – SABO

The Swedish Public Housing companies

Markera aktivt kapitel

För att göra en rad i agendan fetad och grön, markera raden och klicka på Öka listnivå under Start-fliken.

Alternativt använd Tab-tangenten för att öka listnivå, och Shift + Tab-tangent för att minska listnivå.

High construction costs

1. Poor competition for construction and materials

2. Favourable treatment for tenant ownership (Bostadsrätt)

3. Appeals process (Överklagande)

Markera aktivt kapitel

För att göra en rad i agendan fetad och grön, markera raden och klicka på Öka listnivå under Start-fliken.

Alternativt använd Tab-tangenten för att öka listnivå, och Shift + Tab-tangent för att minska listnivå.

What we do

1. Serial production – the Kombo House

2. Foreign constructions companies 3. New business models

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Lägg till en ny bild genom att klicka på ikonen i mitten av bildytan. Leta fram din bild och klicka på Infoga.

Valfritt: Ändra färgton på bild


1. Klicka på knappen Färg långt till vänster i verktygsfältet.

2. Välj en färg under Ändra färg i listan.

Alla tillgängliga färger utgår ifrån SABOs eget färgschema.

Text

Du kan också ändra ordet ”tack” till Information ifall det passar bättre

Susanna Höglund [email protected]

Thanks!

mailto:[email protected]

© BKK-3

Affordable housing – where does Sweden stand and what can it learn from other

countries?

Austria: The example of Vienna

Stockholm, 23rd of November 2018 Susanne Bauer, Wiener Wohnen Kundenservice GmbH

Dimension and Size Area: ca. 415 km² Inhabitants: 1.840.266 (2016)

Metropolitan Region

Centrope: ~ 7,2 Mio Inhabitants

Administration and Organisations

Capital and Federal State 23 districts, UN, OPEC, OECE, etc.

Economy and Wealth 1st place in „Quality of Living Ranking” since 2009 by Mercer

GDP/capita: € 47.700 (Dez. 2016), average age: 40,5 years; 185.000 students;

© Stefan.lefnaer

The City of Vienna – General Facts and Figures

Overview: Housing structure in Vienna

05

101520253035

33,3%

20% 25%

12%

6% 4%

Housing stock property Rights

Datenreihe 1

Source: Statistik Austria, Mikrozensus 2015, Neues Hochrechnungsverfahren ab 2014

Share of socially rented flats - in the stock of primary residences

Source: Statistik Austria, Registerzählung 2011

spatial distribution

Important Legal Framework in Vienna: (a selection:)

Mietrechtsgesetz (MRG)

Viennese Housing Promotion and Renovation Act Limited profit Housing Act

Rent Act

MA 50 – Referat für Wohnbauforschung und internationale Beziehungen

Wohnfonds_Wien: Vienna Building Fonds


Statistics – refurbishment since 1985 / guarantee until 31.12.2016


Statistics – new buildings since 1995


Use of subsidies:

Vienna Housing Subsidies 2018

Total: 532 Mio. Euro

Object funding

about 430 Mio. Euro

Subject funding

about 102 Mio. Euro

Subsidised new construction about 266 Mio. Euro

Subsidised renovation: about 164 Mio. Euro

Source of funds: Contribution of employees and employers 0,5% each


Limited profit housing associations (LPHA)


Income thresholds subsidised and municipal housing

Gross and net annual income (arithmetic mean) of employed persons in Vienna 2016 Gross: 32.374 Euro (F: 27.925, M: 36.544) Net: 22.458 Euro (F: 19.877, M: 24.876)

Further Initiatives 1: - WBI: Vienna‘s housing initiative 2011 6.250 units will be built additionally to subsidised public

housing. 1.600 units will be built in Seestadt Aspern, Vienna’s lake side. Private partners are encouraged through financial means

- Gemeindebau NEU – New municipal housing The construction of further

4000 municipal flats by 2020

Further Initiatives 2:

• SMART Housing – complete, compact, cost-efficient

• 1/3 of all new construction is „SMART“ , Apartments that combine a compact ground flor plan with innovative, socially sustainable architecture

• “Slim Building” ®“Action Programme for Prefabricated

Buildings” (Sofortprogramm Schnellbauweise), • Temporary living, flexible floorplans, additional communal areas

foto: kallingerprojekte

7,50 €/m2

Vienna Housing Action Plan 2016 - 2018

Thank you for your kind attention!

Slet billede (hvis der er et). Klik på ikonet for at tilføje et billede.

Nulstil dias hvis der er problemer .

For at justere billedet:

1. Klik på billedet

2. Vælg ”billedværktøjer”

3. Brug beskæringsværktøjet til at flytte og/eller forstørre billedet – pas på med at hive i selve billedrammen (= billedpladsholderen)

Affordable housing – can Sweden learn from Denmark?

Stockholm 23rd of October 2018 Torben Liborius, Director at the Danish Construction Association

I begge indholdsbokse kan placeres tekst, billede, tabel

og andet indhold i Slet eventuelt billede. Klik på ikonet for at tilføje et billede.

Fravælg bullit i teksten, hvis det ikke er relevant

To indholdsbokse

Stockholm vs. Copenhagen, differences, similarities and inspiration What is affordable – how is affordable housing to be supplied?

Cheap housing in Copenhagen is a rent less than SEK 4000 pr. month

The demand for cheap housing is higher than the supply in both cities

Construction activity is high in both cities – highest in Stockholm

Development in prices on owned apartments - puts pressure on the rental

market

Apartment sizes – Stockholm have a higher share of small apartments

Distribution of ownership by sector

Other factors, regulations etc.

Billede til højre – indhold til venstre

• Højre boks er til billede

• I venstre indholdsboks kan placeres tekst, billede, tabel

og andet indhold i

Slet eventuelt billede. Klik på ikonet for at tilføje et billede.


Apartment prices are high in both Stockholm and Copenhagen

34 000

38 000

42 000

46 000

50 000

54 000

58 000

62 000

Sqm. prices in SEK (current exchange rate, not PP-adjusted)

Stor-Stockholm (Greater Stockholm)

København by (City of Copenhagen - 4 municipalities)

Region Hovedstaden (Greater Cph Region)

Source: Finance Denmark and Svensk Mäklerstatistik

Fravælg bullit i teksten, hvis det ikke er relevant.

Denne skabelon har to indholdsfelter med mørk tekst ovenpå

helsidefoto. Så vælg et lyst og roligt helsidebillede.

Pladsholder for baggrundsbillede:

1) Slet billede eller andet indhold. Nulstil dias

2) Klik på det midterste billede-ikon for at tilføje et billede.

3) Højreklik på rammen af baggrundsbilledet og vælg ”placer bagerst”.

Pladsholdere for indholdsfelter:

1) Slet billede eller andet indhold. Nulstil dias.

2) nulstil dias og højreklik på på rammen af baggrundsbilledet og vælg ”placer

bagerst”.

Der kan placeres tekst, grafer oa. over helsidebilledet i

pladsholderne (indholdsfelterne). Indholdstfelterne kan evt.

tildeles en transparent farve

Rental legislation in Denmark in favor of the tenant

Legaly, a ‘market rent’ can only be agreed for residential properties that were put into use for the first time after 1991.

For older properties, the rent is determined either by ‘the value of the rental’ or by the ”reasonable” operational costs associated with the property.

The ”housing rent court” has very low valuation of acceptable rent.

Substantial renovation can make way for a rent increase

With out the ”1991-rule”, only standard contract law would protect against unreasonably high market rents on rental properties.

”1991-rule” means more affordable housing in the pre-1991 buildings

But does it curb the supply by slowing down the moving frequency?

• Venstre boks er til billede

• I højre indholdsboks kan placeres tekst, billede, tabel

og andet indhold i

Slet eventuelt billede. Klik på ikonet for at tilføje et billede.


Billede til venstre – indhold til højre

Fewer small apartments in Copenhagen than in the largest 3 cities of Sweden – the answer can be ”the 95 sqm-rule”

9,5%

43,8% 28,1%

11,2%

7,3%

Apartment sizes in Copenhagen (as a share of total number of apartments),

2018

Less than 50 sqm. 50-74 sqm.

75-99 sqm. 100-124 sqm.

More than 124 sqm.

Source: Statistics Denmark

26,1%

34,1%

31,2%

5,4% 3,2%

Apartment sizes in Sweden’s biggest 3 cities (share of total number of

apartments), 2017

Up to 50 sqm. 51-70 sqm.

71-100 sqm. 101-120 sqm.

More than 120 sqm.

Source: Statistics Sweden











bagerst”.




Social ownership of apartments in Copenhagen

Only about ¼ of apartments in

the city of Copenhagen are

privately owned.

Social housing organisations

(21,3 %) and private housing

cooperatives (34,0 %)

accounts for a large proportion

of residential apartments in

Copenhagen.

24,8%

21,3%

12,6%

34,0%

1,2% 6,2%

Distribution of ownership, 2018

Privately owned Social housing organisations

Companies (A/S, ApS and other) Private housing cooperatives

Public authorities Other, n/a

Source: Statistics Denmark











bagerst”.




Social housing (”almene”) sector in Denmark

The sector supplies a large share of the affordable segment of housing

”The 25 % rule” in relation to new residential areas

Base capital supplied by the municipality = 10%

Construction of new dwellings are subject to a ”sqm-cost limit” – increased use of prefab and modular houses

Balanced rent, annual total of 3% of construction costs, public subsidy for further costs

The National Building Fund


Vælg og slet tekstboksen og nulstil dias, hvis der er tekst i forvejen,

så der kan placeres tekst, billede, tabel og andet indhold i boksen

Further food for thought

Conversion of older commercial buildings to housing

Land in temporary use

New building technics to hold costs down

”AlmenBolig+” – a concept where the tenants co-build and participate in the

up keep

What are the effects of (further) introduction of market based rent?

A bigger supply or higher rent: OECD vs. The Danish National Tenants Organisation

Thank you for your attention!

Documents

Sweden's housing market: structural challenges · Ta bort bilden genom att markera den och trycka på Delete-tangenten. Lägg till en ny bild genom att klicka på ikonen i mitten