Sweden Wants Shovels in Ground as Refugees Fuel Housing Crisis

  • Costs will be high even after inflow eased, minister says
  • 200,000 refugees is 'golden opportunity' for companies

Swedish housing developers will need to step up the pace as a record inflow of refugees feeds a growing housing crisis, the country’s financial markets minister said.

There was a housing shortage even before refugee flows gained intensity over the past months. The National Board of Housing said last month that 461,000 new homes are needed between 2015 and 2020, while only about 45,000 homes are projected to be built this year.

“Of course, with 200,000 new citizens the needs increase even more than before,” Financial Markets Minister Per Bolund said in an interview Friday at parliament in Stockholm. “With the low interest rates right now, it seems like a golden opportunity for the construction companies to put the shovel in the ground.”

The matter is also gaining urgency as the central bank warns that the red-hot housing market poses a danger to the economy as a whole as it cut interest rates to revive inflation. On top of record low rates, a lack of housing has been instrumental in driving property prices and household indebtedness to records.

Tightening Controls

Sweden, a country of 9.8 million people, has seen more than 200,000 refugees apply for asylum in 2014 and 2015, including 80,000 in the past two months. An influx of more than 10,000 a week over several weeks this autumn turned out to be too much to handle, with the Migration Agency first putting up tents and then announcing that it could no longer offer any housing.

Border controls were imposed on Nov. 12 and the country on Nov. 24 said it plans to stop issuing permanent residence permits, bringing the rules down to the European Union minimum.  Prime Minister Stefan Loefven said last week that while the border controls have led to a decline to about 7,000 refugees a week, the number is still too high. 

Bolund’s Green Party, which rules in a coalition with the Social Democrats, reluctantly agreed to tightening the rules, and will only accept further changes as long as they comply with international asylum rules and conventions. The party has threatened to quit the government if borders are closed, for example.  

“If we start to compromise on those principles, that gives other countries a green light to also compromise on those principles, and that’s something we don’t accept,” he said.

Even after the tightening, absorbing all those who have already arrived will mean large costs, according to Bolund. 

“There will be less pressure, but we’ve already received 200,000 people and need to build a large number of new schools, welfare systems that work and housing,” he said. “We have big costs ahead of us.”

The number of refugees arriving in Sweden this year is the equivalent of big city, Skanska’s CEO Johan Karlstroem said in an interview earlier this week, calling for more public-private partnerships in infrastructure. 

That’s “absolutely” something the government is looking into, Bolund said.

Before it's here, it's on the Bloomberg Terminal.