I heard finding housing in stockholm is very hard. How do policies like this play in practice? Is it like how some US states pay you to move there except it's really nowhere near enough to be considered a livable income?
Swede here. We have a largely regulated rental market throughout the country, stupid as it is. In my view, this is an old remain from bygone times, but for some reason it is romanticised by many.
With this system you have to stand in line for at least 20 years to get a decent rental apartment in inner-city Stockholm. As you can probably guess, this system doesn't exactly encourage free movement. And it's created a huge black market, plus that it's pushing everyone into buying.
The issue is far more complicated than simply not having de-regulated rents. De-regulating rents would do something, no doubt, but there are so many more reasons why we have astronomically high real estate prices at this moment (and didn't have them just 20-25 years ago).
* We have massive tax cuts and subsidies for home owners. You get to make deductions off your interest rate payments, something that was introduced as an emergency measure in the 90s. We also have effectively no real estate tax, meaning there is no incentive to move out when your kids have moved out and the home is more than you need.
* For a long time, there was no need to even pay the principal of your mortgage. Now there is and it's one of the primary reasons the prices have gone sideways in Sweden for the past year.
* The local governments don't want renters and have gradually been given more and more power to get rid of them. They own a lot of the rentals and especially in Stockholm they have aggresively converted them into apartments that are owned (the common, Swedish system of buying a membership into a home owners organization is a bit hard to translate into an appropriate English term, but it's called "bostadsrätt"). The national government is basically powerless to increase the housing stock, if you go back to the 60s when my grandparents were facing a housing crisis the national government had the power to build one million homes mostly in the bigger cities like Stockholm, Gothenburg and Malmö. They have nowhere close to that power anymore and the local governments have no incentive to solve the problems of low income people in a completely different city who would like to switch cities to get a decent living.
There are more than these too, these are just the first ones that popped into my head.
And all of this is unfortunately hard to change because most Swedes live in homes they own and it's a very common retirement plan. People who are in their 30s, like me, also think that falling interest rates well below inflation is the new normal because they've known anything else throughout their adult lives and thus take larger risks than they should.
I've never understood the purpose of price regulation without the government being involved in the market.
Let's use rent control as an example. The government is setting an upper bound to prices. The limit may not be high enough to justify building more units. Therefore there is a perverse incentive for the government to enact a bad policy because it is shielded from the outcomes but gains public support because visible indicators (like average rent price) look normal again.
There would be a simple way to make this system not horribly broken. When someone wants an apartment and wants to pay the regulated price the government should be responsible for building that regulated unit or subsidizing the difference between the regulated price and the market price. This aligns incentives because now the government is on the hook for actually solving the problem and if it fails to do so it will be financially punished because setting an artificially low market price will cause the government to lose money.
In Germany there are city owned housing associations that are responsible for providing low cost housing. This system works very well but I think cities like Berlin are not utilizing it correctly. They just want a quick political band aid and make the problem worse by avoiding responsibility.
Bah, stick to the truth: 20 years is for the decent but super cheap apartments, if you pay “market rates” you can get something from the private owners within months.
I don't think that's true. The private renters also have to abide to the regulated market prices, so you cannot buy your way to a rental apartment. Not unless the renter is breaking the law, that is.
I admit that I pulled the 20 years stats out of a hat. I quickly looked for some stats, and this page suggests around 10 years average for the private market, and 13 years for the communal: https://www.stockholmdirekt.se/nyheter/sa-lange-maste-du-koa...
The truth is that the existing system with regulated market prices ensures that ordinary people can save some of their wages and spend it on things like summer houses and holidays. As soon as you go fully private, rental prices double and all of that profit goes to a 1% who own housing. Of course, there is a narrative here that we have to abandon the regulated rental market - driven by that 1%. Then ordinary people, excluded from the regulated rental market because they have to wait 20 years to get the place they want, gang up with the 1% - which is insane! The truth is you can get a regulated rental appartment within 6 months if you take it in a crap neighborhood. But, everyone wants to live in the same places, and demand is high. So, the regulated market makes you queue - based on your waiting time, not ability to pay. There is, of course, a huge private ownership market, but prices are very high.
By "you” I think he means most swedes. I don’t know anything about the Stockholm rent market, are rents cost accessible to the average person or is a top-teir-income zone?
They are “too” affordable due to rent control, especially in the city centre. Leading to people viewing a contract as an asset that shouldn’t be given up for free but rather traded for another contract or sold (illegal).
All rents follow a standard model based on a number of parameters, but it's purposely constructed to enable lower-income household to aquire apartments in attractive locations. At the time of inception, the construction was considered an alternative to dedicated social housing.
I recently moved to Stockholm and have lived here for over a year. Finding housing that wasn't astronomically expensive (in relation to the salary level) was really, really tough.
