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Swedish welfare state and housing markets: under economic and political pressure

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Abstract

Economic and financial crises are often connected to crises in the housing market. Some housing systems are, however, more sensitive than others. Traditionally, Sweden’s system aimed to protect households from such volatility, but changes in the welfare state model and increased mortgage indebtedness suggest that Sweden’s housing market might have become more exposed to macro pressures. The starting point for this article is an understanding of the Swedish welfare state model in which housing was traditionally a core value and where the link between income and housing outcome has been weakened. Deregulation and liberalization have fundamentally changed the special features on the Swedish housing market. In particular, the rental sector is decreasing in favor of increased ownership and greater speculation. In this article, we aim to give a picture of the grand restructuring of the Swedish housing sector including its implications for the link between income poverty and housing poverty and an understanding of the contradictory reaction of the welfare state to the global financial crisis (GFC). Our results show that affordability is a problem and that the proportion of households at risk of poverty has been increasing when taking housing costs into consideration. However, a combination of the lessons learned in the 1990s crisis and resultant increases in regulation together with a stronger and more immediate recovery than might have been expected meant that Sweden and its housing system came out of the GFC fundamentally intact. However, there must be concerns that future crises will not be so readily addressed.

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Notes

  1. It is important to note that the affordability problems addressed by social housing in other countries are in Sweden dealt with by the municipal housing sector. This part of the rental market is open to all, i.e. the allocation principle is waiting time not need. Thus, in this text referred to as public rental (and not social rental).

  2. Cooperatives are traded on the market at market prices. Formally, you do not buy an apartment, only the right to occupy it. Thus, as an owner of a co-op, your actions are restricted and must be approved by the association. Buyers of a co-op dwelling are further required to have the cooperative as their permanent residence, which thus have limited speculative actions within this sector.

  3. Geosweden includes microdata for the resident population of Sweden during 1990–2008. Geosweden is built up from different datasets maintained by Statistics Sweden for the production of official statistics.

  4. It is worth noticing that Statistics Sweden (SCB) follows ILO standard and counts students who are applying and prepared to take a job as unemployed.

  5. A huge limitation in EU-SILC is the definition of rental housing where public and private rental housing is merged in one group. This has made it impossible for us to analyse the effects of public housing which has been one of the most important tools in the Swedish welfare model to break the link between income and housing outcome.

  6. To derive poverty status after housing costs, total housing costs are deducted from net income, from which any housing allowance has already been deducted.

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Acknowledgments

We thank the referees and editors for useful comments. This research was supported by funding provided by the European Community Program for Employment and Social Solidarity 2007-2013 and by NORFACE to the NODES project 2009-2013.

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  1. Institute for Housing and Urban Research, Uppsala University, Box 785, 801 29, Gävle, Sweden

    Emma Holmqvist

  2. NOVA Norwegian Social Research, Postboks 3223, Elisenberg, 0208, Oslo, Norway

    Lena Magnusson Turner

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Correspondence to Emma Holmqvist.

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Holmqvist, E., Turner, L.M. Swedish welfare state and housing markets: under economic and political pressure. J Hous and the Built Environ 29, 237–254 (2014). https://doi.org/10.1007/s10901-013-9391-0

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