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
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5=1
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Index of completed dwellings
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Strong housing demand in Sweden
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2000 2005 2010 2015
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Real house prices
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IRL
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The Swedish Construction industry performs the best
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-40 -20 0 20 40 60 80 100 120
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ange
in t
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ou
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o G
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
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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
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DK DE
US
IRL UK
ES
FRA
FI
NE
Housing is becoming more affordable
0,60
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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
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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
Greater Stockholm 10537 127 13114 73
Greater Göteborg 7626 86 10744 59
Greater Malmö 6765 60 9638 31
Municipalities with > 75000 inhabitants* 6314 68 8611 29
Municipalities with < 75000 inhabitants* 5166 54 7189 17
Rent per apartment in new buildings
Sweden 6053 54 9975 48
Greater Stockholm 7636 65 12722 68
Greater Göteborg 7412 80 11043 63
Greater Malmö 5540 31 9644 31
Municipalities with > 75000 inhabitants* 5856 56 9925 49
Municipalities with < 75000 inhabitants* 4824 44 8712 42
Rent in rented apartment
Sweden 3921 0 6759 0
Greater Stockholm 4635 0 7569 0
Greater Göteborg 4107 0 6764 0
Greater Malmö 4241 0 7374 0
Municipalities with > 75000 inhabitants* 3758 0 6674 0
Municipalities with < 75000 inhabitants* 3356 0 6137 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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Valfritt: Ändra färgton på bild
Markera bilden och gå till fliken Bildverktyg FORMAT.
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
Byt bild
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Ta bort bilden genom att markera den och trycka på Delete-tangenten.
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
Markera bilden och gå till fliken Bildverktyg FORMAT.
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!
© 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
MA 50 – Referat für Wohnbauforschung und internationale Beziehungen
Statistics – refurbishment since 1985 / guarantee until 31.12.2016
MA 50 – Referat für Wohnbauforschung und internationale Beziehungen
Statistics – new buildings since 1995
MA 50 – Referat für Wohnbauforschung und internationale Beziehungen
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
MA 50 – Referat für Wohnbauforschung und internationale Beziehungen
Limited profit housing associations (LPHA)
MA 50 – Referat für Wohnbauforschung und internationale Beziehungen
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!
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Affordable housing – can Sweden learn from Denmark?
Stockholm 23rd of October 2018 Torben Liborius, Director at the Danish Construction Association
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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.
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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
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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?
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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
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
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
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
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
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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!