Will new rules on rent setting and subletting of owned-housing lead to a change? Housing construction has been low and the gap has been particularly large in the metropolitan areas between the “need for housing construction” and the number of actually constructed flats. What are the obstacles?
THE FINANCIAL CRISIS led to falling housing prices in many countries when the bubbles burst. Why did Sweden avoid a price fall? There has not been an efficient use of the housing stock for a long period of time. Will new rules on rent setting and subletting of owned-housing lead to a change? Housing construction has been low and the gap has been particularly large in the metropolitan areas between the “need for housing construction” and the number of actually constructed flats. What are the obstacles? Should the government not take greater responsibility for reducing the influence of different special interests?
HOUSING PRICES reached a high level in 2008, but prices have largely remained unchanged since then. The discussion about bubbles can be put aside. Explanations for there being no price fall can be found in the fact that a brake was swiftly put on housing construction and that households were not “forced” to sell.
There should be an improvement in the use of the HOUSING STOCK due to the fact that the rent norm now consists of negotiated rents also with private agents and that the public housing companies are to be run in a business-like way. However, it has not been decided exactly what these changes entail. The rules have also been changed for housing that is owned and can now more easily be sublet.
The problems with HOUSING CONSTRUCTION might, among other things, be referred to the planning-, construction- and environmental legislations, which require direct influence from citizens with ensuing appeals. Moreover, municipalities are not always interested in the construction of housing, in particular not inexpensive housing. Companies might also be adverse to construction since one does not really want to reduce the price when there is a decrease in demand.
AUTHOR Hans Lind is Professor of Real Estate Economics at the Department of Real Estate and Construction Management. E-mail: hans.lind@abe.kth.se.