With Sweden’s election taking place on Sept. 14, all eyes are on parties with solutions to the health care and education crises, but there has been relatively scant talk of one of the country’s most relevant issues—Stockholm housing.
Due to Stockholm’s infamously strict housing market, its citizens are having an incredibly hard time finding an apartment.
There are two main factors underlying this phenomenon. First, the city wait list for a new apartment is now 15 years on average, or 7.7 years in the Greater Stockholm region. Second, Stockholmers live alone. Very alone. In fact, Sweden has the lowest number of persons per household in the OECD, with just 1.99 persons per household, compared to the OECD average of 2.63. And in Stockholm, that numbers is 2.1, almost the lowest for any capital in the world, while the average household size comes in at 41 sq m, on par with other countries.
Stockholm is today one of the few capitals in the world where you cannot simply move to and hope to find a rental. You either have to wait in Stockholm’s official housing line, which has about half a million people ahead of you, or you can wait in one of the co-op lines, which own 28% of rental properties. Yet, if you look to Sweden’s largest co-op, there are exactly zero apartments available in Greater Stockholm.
Today, estimates have Stockholm lacking an astounding 431,144 housing units at the end of 2013. That’s an 8% increase from the year before.
According to Nobel-prize winning economist Paul Krugman, Sweden is already a “significant housing bubble” with housing prices rising of 300% in the last 13 years. Sweden’s finance minister, Anders Borg, agrees and sees the risks of the housing market. But the deputy governor of Sweden’s central bank, Lars E.O. Svensson, is not convinced, and believes that “other fundamental factors” are at play, including “rapid urbanization” and little new construction.
The sitting center-right Alliance (a block of four parties) is seeking to address the housing crisis by building 140,000 new housing units by 2030, as part of their election platform. The Christian Democrats, a minor party in the Alliance, is specifically focusing on smaller apartments. Christian Democratic member of parliament Erik Slottner told Quartz that ”new rules enable smaller apartments down to 25 sq m, which are ideal for young people looking for their first apartment. Our party is pushing for lowered rents for apartments below 35 sq m. We need to increase the rate of construction, there are no other shortcuts here.”
Meanwhile, the opposition Social Democratic Party is promoting a 1 billion SEK (approximately $150 million) building bonus focused on studios and one-bedroom apartments for students. Social Democratic member of parliament Arhe Hamednaca thinks that “for continued economic growth, we need geographic mobility, but the last eight years Sweden has lacked the political will and been among the least likely in the West to invest in new housing, and instead sold off the city’s existing rental properties.”
Buying a two bedroom apartment in Stockholm ranges from $250,000-930,000 depending on the neighborhood, or $3,190-11,600 per square meter, according to official realtor statistics. Meanwhile, renting, often the first step for young people and immigrants, is increasingly hard to come by. In the last 10 years, 35,000 rental properties have been converted to condos with the result that the black market for getting a rental property is $29,000 per room. To be clear, that means paying someone $29,000 just for the right to rent that room.
There is another interpretation of the system. According to Ingela Lindh, CEO of Stockholmshem (the largest municipal housing association), apartment rents are too low. But she cautions against introducing market rates in Stockholm: ”there are no countries which have market rates [for housing] that don’t also have so-called ‘social housing’ and I want to avoid that at every cost.”
And perhaps Stockholmers have unreasonably high expectations of when they should find their own place. According to Eurostat, more than half of Swedes have moved from home by the time they are 21 years old, the highest percentage in the EU, beat only by neighbors Finnish and Danes.
Either way, with construction moving at a slow pace, and at the highest cost in the EU—72% above the average—the people of Stockholm and those moving in have figured out that with little or no new supply, the only way to make it work might be to move in with somebody, not by choice but by necessity. This is what decades of too little construction have led to: a new Stockholm Syndrome.