Response to interpellation 2023/24:498 on the desired effects of different types of support for housing construction
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD considers that production support is not effective because it goes to housing that would have been built anyway and that these funds were needed for welfare and defense 1. KD argues that demand is receding because people cannot afford it 1 and advocates for investigations into rental-purchase models, ownership apartments, and shorter lead times 1. KD proposes mandatory rental guarantees for families with children 1 and emphasizes that the government has strengthened the targeted housing allowance 2. S argues that the investment support lowered the costs for housing that would have been built anyway 3. S wants a mix of housing 4 and an extension of the increased housing allowance 5. SD considers that the need for housing has increased due to poor migration policy and advocates for tax cuts.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Andreas Carlson (KD)
Madam Speaker! Leif Nysmed has asked me what I meant by my statement regarding the effects of construction subsidies that have not been achieved. Leif Nysmed refers to statements I have made on social media, where I comment on the difficult situation for housing construction and present how the government believes we should get out of the current situation.
There are two reasons why the government does not see production subsidies as an effective way to increase housing construction. The first reason is that production subsidies, in larger or smaller parts, go to housing that would have been built even without subsidies, which is not a good use of tax money. The second reason is that there is a risk that the conditions the state sets for the production subsidy will dictate what is built rather than the demand on the housing market dictating it. This implies risks of poor resource utilization when what is built in the longer term does not turn out to be what the housing market has demanded.
The proportion of a production subsidy that goes towards something that otherwise would have been built varies, of course, with the subsidy's focus. When Boverket evaluated the then current production subsidies in 2005, the conclusions varied from the subsidies completely lacking effect to two-thirds of what was built being an addition that otherwise would not have been realized, depending on the form of subsidy and the form of tenure. For the most recent investment subsidies, there are consultancy reports pointing out that much of what was built would have been built even without the subsidy.
When it comes to the second effect – that the risk is that construction will be driven by subsidies rather than demand – parts of the final cohorts of the Million Programme and the all-too-extensive housing construction in smaller towns in the late 1980s are clear examples.
Leif Nysmed (S)
Madam Speaker! I would like to begin by thanking the Minister for the answer.
Unfortunately, the Minister fails to answer my question. I did not ask what the Minister's and the Government's personal values are in this, but I asked what effects the investment support has not led to but which had been desired. I wonder what it was that one wanted the investment support for when it was introduced, not what others desired it should be used for.
The goal of the investment support was, for example, to build more rental apartments and housing for students. That effect was achieved. Over 50,000 apartments were built.
Another goal was that the housing should have relatively lower housing costs. That effect was achieved. A three-room apartment of 70 square meters became approximately 2,000 kronor cheaper, according to a report from Tyréns which was commissioned by Hyresgästföreningen. The effect that the housing should have a lower energy consumption than what applies for other new production was also achieved. To then claim that the desired effects were not achieved is simply incorrect.
The Minister states in the response to the interpellation that the first reason for being against production support – in social media he speaks of building subsidies and various supports in general – is that it goes to housing that would have been built even without support, which is not a good use of tax money. Yes, one might think so. But it was a large part that otherwise would not have been built, approximately 30,000 homes according to Tyrén's investigation. Furthermore, all 50,000 were built at a lower cost, which was the effect we wanted so that more people could demand the housing. And it was not only people with low income who were to have the right to them, for we have or have at least had a general housing policy in Sweden.
If it is not a good use of tax revenue to provide tax funds when it would have been built even without support, one can ask whether the Minister is against the interest deduction. Many of the houses and condominiums that are being built will be built even without the interest deduction. Is the Minister against the interest deductions? Is it also poor management of tax revenue?
The second thing he highlights is that production support, rather than demand, will govern what is built on the housing market. To some extent, there may be a certain shift. But it is based on need, for we do, after all, have a desire to manage the housing supply in the country?
If one only follows the demand for housing, there will be very many people who are unable to demand a housing unit. The problem today is that the housing is too expensive, both the rented and the owned. That is why it is not being built. One does not get paid for what one produces. Therefore, we have these catastrophic figures.
My question is: If only demand is to govern housing construction, where will those who cannot afford to demand housing live? And how does the Minister view the need for 67,000 new homes per year, which Boverket has calculated? How are we to solve that?
Roger Hedlund (SD)
Madam Speaker! Leif Nysmed has submitted an interpellation to the Minister regarding the investment support and its effects.
We Sweden Democrats have always opposed this investment support, because it burdens the state budget with an enormously large sum. The last support that the Social Democrats put forward contained 4 billion kronor. In addition, there was an authorization, i.e., a future commitment, to pay out the support in the future for the construction that results from the opportunity to receive part of the support; here the sum was 9 billion kronor. It is therefore enormous sums in the state budget that we are talking about.
The question is what effect we get from this. If one looks at the figures that Boverket has delivered regarding housing construction during the previous government, one sees that the Socialdemokraterna have contributed to building up the shortage of housing. According to Boverket's report, a shortage of 175,600 dwellings has been built up. They have thus not contributed to reducing the housing shortage in Sweden but rather increased it, despite this investment support which they claimed would have such enormous effects and despite the fact that we have had a low interest rate, largely zero interest, and low inflation. Despite this, Madam Speaker, they failed to achieve the goals that Boverket set, and instead created a shortage for future generations on the housing market. The Socialdemokraterna's housing policy has thus hindered the possibility of entering the housing market.
This investment support, Madam Speaker, has rather created negative effects and steered the supply that the housing developers have produced. It limits the companies' opportunities to freely design the housing if they simultaneously feel that they want to participate in the investment support. It creates expectations within the construction industry that one will receive support from the state when it comes to construction, and it is not a good way to create innovative solutions for the future.
What is needed is foresight and long-term thinking within housing policy. Housing is not built in two years. It takes a very long time to build housing. In that case, long-term conditions are needed, and that is what the Sweden Democrats and the government are working on today.
We need to simplify the building regulations and shorten the lead times. We need to create the conditions to enter the owned market and utilize the stock better than the previous government did. We need to work on developing an upcoming proposal for changes to the amortization requirement and, above all, create better competition within housing construction so that people can afford to demand the housing that is being built.
With this, Madam Speaker, I want to say that it is quite telling what the investment support has actually contributed to and what the Social Democratic government has handed over to future generations.
Markus Kallifatides (S)
Madam Speaker! Thank you, Minister, for the answer to Leif Nysmed's pressing interpellation! I intended to try to clarify and repeat Leif Nysmed's important question. I too am very curious to hear the Minister reason regarding the difference between people's demand, that is to say their ability to pay and their desire, and people's need for housing. The Minister for Housing is welcome to elaborate on how he views this distinction and whether the difference between demand and need in any way affects what policy needs to be pursued so that demand and need shall be met.
Roger Hedlund, Sverigedemokraterna, also participates in this debate. He speaks of enormous sums and refers to the previous investment support for the construction of rental apartments with lower rent levels and student housing which is now being phased out. We are talking about 4 billion during a single year. If I remember correctly, the budget item for 2024 amounts to 3.7 billion for this support, which is therefore being phased out, and it will be some small fragment during 2025.
4 billion corresponds to approximately half of the rut deduction in the Swedish state's finances. The investment in reduced fuel tax is many times larger. Tax cuts for high-income earners during previous budget years are many times larger. 4 billion sounds like a lot of money and is a lot of money, but in the state's budget, it is hardly enormous sums, Roger Hedlund!
Then Roger Hedlund claims that this investment support, which existed and actually still exists but is being phased out, in some mysterious way would have contributed to the housing shortage that exists in Sweden.
That there is a housing shortage is quite clear. Boverket states it. The support has also, according to all evaluations, led to more housing being built in Sweden than would otherwise have been the case. But according to Roger Hedlund, the investment support has therefore in some way contributed to worsening the housing shortage. It is very strange.
Roger Hedlund also speaks about the need for innovation and also increased competition in the construction sector. We Social Democrats share that view. One way to promote innovation is for the state, through different types of support, to set conditions that stimulate innovative attempts and initiate innovation processes. It is a position that we now have plenty of support for also from economic research on innovation processes, Madam Speaker. It is often important that the state is involved initially and ensures that innovation in different sectors gets started. I hope that the Minister also takes this to heart and considers it.
Finally, we have this matter of competition. Yes, where are the proposals, is the question to the Minister and to Roger Hedlund. Where are the proposals on how we increase competition, in the extent that there are deficiencies there?
Madam Speaker! I had one point remaining. Roger Hedlund, Sverigedemokraterna, emphasizes that housing is not built in two years. No, that is correct. It is longer periods than that – perhaps seven or eight years from the first thought until something stands finished. That is precisely why it is so important during dramatic losses like those we have seen now and those we have seen in previous crisis situations that the state steps forward, shares the risk, and ensures that the construction is not allowed to totally collapse. That is the reality we live with.
Statsrådet Andreas Carlson (KD)
Madam Speaker! Thank you to the members for their commitment to the issue! I shall try to answer some of the questions from the members. Let me begin with the first one, which concerns the effects and how much money has been paid out for housing that would have been built anyway. According to an evaluation of the investment support that Tyréns conducted for Hyresgästföreningen - I believe it is the evaluation that Leif Nysmed refers to - about four out of ten dwellings would have been built even without the support, which means that approximately 10 billion kronor of what has been paid out has gone to dwellings that would have been built anyway. It can hardly be said to be particularly well-used tax money.
Of course, this can be put into perspective. I think we have seen examples of this here in the chamber this afternoon, but one needs to put the 10 billion in context. It is not a small amount of money. The reform space in the budget bill for 2024 is 40 billion kronor. That is money that needs to go to welfare, to schools, and to healthcare. It needs to go to expanding the defense and the justice system. There are many other needs to be met instead of scattering money on housing that would have been built anyway, Madam Speaker.
When it comes to the question of the interest deductions, I mean that Leif Nysmed is comparing apples and oranges. I am not against the interest deductions.
When it comes to this matter of demand versus need, which Leif Nysmed and Markus Kallifatides are touching upon, I do not know whether I should interpret it as them advocating for something that would resemble a planned economy. Of course, demand is important. It is about more people being able to demand a home. A very large part of the explanation for the decline in the housing market right now is that demand is receding so sharply that people cannot afford to demand a home, and those who can afford it are nevertheless waiting as a result of the uncertain times we live in.
Here, the government is taking several measures. We have appointed an inquiry that reviews the macro-based supervisory measures regarding the tightened amortization requirement and the mortgage ceiling. We have appointed an inquiry that looks at rent-to-buy models, where there are successful examples from other countries. There, one can buy half of the apartment and so to speak pay off the other half. That, of course, lowers the requirement for capital investment at the first time of purchase and makes it possible for more people to demand a home. We have appointed an inquiry on owner-occupied apartments.
It is also about the broad work of shortening lead times. We have been painfully reminded that time is money, and money is not free. Reducing lead times also lowers costs.
This is not in opposition to the work regarding the need for housing. The Government has referred a memorandum to create better conditions in the housing market. Among other things, a number of clarifications are proposed in the law regarding municipalities' housing supply responsibility.
It is proposed in the memorandum that it should be mandatory for municipalities to provide rental guarantees to families with children under certain conditions. The purpose is to facilitate access to such housing for families with children who lack their own home. Furthermore, it is also proposed that municipal housing agencies shall be allowed to mediate housing that has been reserved based on different needs and offer priority without affecting the possibility of collecting application fees from the applicants. This is based on an investigation that the previous government presented and which this government has now referred.
Leif Nysmed (S)
Madam Speaker! The Minister speaks of the investment support being money for housing that would have been built anyway. I tried to address that already in my first contribution. Yes, the housing would have been built, but at a higher cost. A higher cost means that fewer can demand them.
There was an effect that we wanted to achieve, and that was that more people should be able to demand housing. I think the reasoning is strange, actually. At the same time as it is perfectly okay to subsidize owned housing in different ways, it is wrong to subsidize rented housing.
It is incomprehensible to me. We make no distinction between owned or rented, rather we want a mix of housing that people can demand based on different situations. That is what is important.
We are now looking at the future. Several have produced background material on how demand will look in the coming years. A clear report is from Veidekke. It has the heading Seven difficult years. There are several banks, including Handelsbanken, that have highlighted this. Boverket also highlighted that we have seven difficult years ahead of us. Then one cannot just sit and say: No, it is only demand that shall rule. Then one must consider how one can get the wheels turning so that something can be built. We cannot just think that people have nowhere to live because they cannot afford to demand. Somewhere, politics must also be able to take its responsibility in tough times.
One can believe that everything will turn around automatically. Yes, we can pretend that it would. But there are incredibly many companies that are already going bankrupt today and which will not exist when we are to start up. It is record-high unemployment. This workforce will not stand and wait two or three years to be allowed back, especially considering that one is also going to worsen the economic conditions in the unemployment insurance fund (a-kassan). Then these people absolutely cannot survive on the unemployment insurance fund until things turn around in some way. They will then seek work in other industries, and then the workforce will no longer be there.
This is a rather frightening and very short-sighted policy from the government. One doesn't really see the effects of it. I think the government and the Council of State should reflect a bit and read a bit in the reports, especially in Seven Difficult Years. The subtitle is about the government lacking an economic program for housing construction.
Roger Hedlund (SD)
Madam Speaker! I pose the question: If this investment support is so fantastic, where is it today? It is a costly reform that the previous government implemented and which had consequences for other areas that have great needs.
Madam Speaker! Markus Kallifatides, in his contribution to the interpellation debate, posed a question to me as to whether this is a large sum or not, and he compared it with the government's and the Sweden Democrats' initiatives to lower the fuel tax and the income tax, and on the rot- and rut-deductions.
I can mean that the prerequisite for one to be able to have a rented home perhaps is that one has own funds. Then it can, for example, be about income tax and lowered fuel taxes. It should not be that we send the individual grant to a specific home, but it should be sent to persons who are in need of getting into the housing market.
Madam Speaker! Markus Kallifatides also asked a question regarding the investment grant. How has it affected the deficit? I mean that the government's policy in the housing policy area linked to the migration policy area resulted in the outcome that Boverket presents in its report: a large deficit. It is a built-up, ongoing deficit where the need for housing on the housing market has not been reduced. The need has been increased through the poorly managed migration policy and housing policy from the Social Democratic government.
Markus Kallifatides (S)
Madam Speaker! I perceived a somewhat crude answer from the Minister regarding the question of demand versus need.
We have housing allowances in Sweden. We have had an investment support. We have state credit guarantees. We have state rental guarantees. The Government emphasized that a proposal on different types of obligations regarding the provision of municipal rental guarantees has now been referred, as well as proposals on expanded possibilities for various types of social priorities. We have land allocations and land allocation policy.
Did this mean that we have a planned economy? No, I do not think so. It means that we have some form of regulated market in most sectors of our society. It is my hope, and the hope of many Social Democrats with me, that we will continue to have that.
The question is: What frameworks do we set politically for market forces in different sectors? It is clear that Roger Hedlund and the Sverigedemokraterna have a very critical attitude towards support for the production of new housing with lower rent levels or with specific profiles, for example student housing. That is something he is very critical of. We Social Democrats consistently present proposals that we should also work on the supply side regarding housing construction and stimulate new production of just the type of housing that we lack.
There is a dividing line there. It is good that it is clear. We stand by our policy.
I take this opportunity to thank the Minister for the opportunity to participate in this conversation. We will see each other again soon.
Statsrådet Andreas Carlson (KD)
Madam Speaker! Leif Nysmed raises the issue of competence supply. It is of course important to secure it as well as one can. I know that there are many entrepreneurs who are now doing everything they can to retain staff. They have a very tough situation right now, which we all see. We share that view. Inflation, the high interest rates, and the faltering economy are the external factors that affect housing construction very dramatically.
It is important to see what lessons can be drawn from the 90s crisis and also the financial crisis, where important competence was lost in the construction sector. It is competence that is needed not only to manage building housing. Housing is very important, but the construction sector is also central in many other areas. It is central for us to succeed with the transition that is occurring and needs to occur and the development that is occurring with new industrialization. It is also about other opportunities that exist but which, of course, presuppose that there is competent staff in the construction sector who can do the work. This is something that the government, of course, follows very closely. I had an important conversation yesterday with the parties in the construction industry about exactly this.
Then there is the question of demand versus need. Yes, sometimes it can become a bit short-winded in these debates, Madam Speaker. But I do not hope that the members perceive me as crude.
There is, of course, a great reason to have housing benefits. The Government has strengthened the temporary and targeted housing benefit for families with children and also extended it due to the tough situation we now have, which affects those who have the very smallest margins and the children who grow up in families living under these conditions. It is, of course, a priority for the Government to see what we can do. That is why we have not only extended the previous government's targeted housing benefit but also strengthened it substantially.
When it comes to other measures, there is both need and demand. There are other structural problems related to increased production and financing costs, not least in the northern parts of the country. There, the needs are great and demand is high, but it is still difficult to achieve the construction of housing. There, the government has a coordinator who has developed proposals. Peter Larsson has, on the government's assignment and in very close dialogue with municipalities and actors in the northern parts of the country, done a very productive job and also presented three measures in his first partial report, which the government is now preparing. It concerns credit guarantees and the use of the Norrland Fund, for example. These are proposals where demand and needs do not stand in opposition to each other. There is a high demand, and there are needs. But the high production and financing costs are a hurdle for housing construction. It is, of course, important and urgent to work on issues to ensure that we get a better functioning housing market.
Leif Nysmed (S)
Madam Speaker! I can only state that the Minister's claim on his social media was incorrect and that the effects intended with the investment support have actually been fulfilled. Then, one may wish otherwise for various political reasons, and there we disagree.
What is often brought up when we talk about rental apartments and people living in such apartments is that there should be no general supports, but rather that individual persons should receive the supports. Now, the increased housing allowance for families with children has been extended until the summer, and I hope that the government looks into an extension even after July 1 in this case. Their situation has not improved because of the rent increases occurring during the spring, which are among the highest in 20 or 30 years. Therefore, one should return to that.
If one is so opposed to general grants for those living in rented apartments, one should also come back with a proposal for a broadened housing allowance, if one thinks that is a more effective way. Perhaps one should also consider the individual support for all who have ownership, as both my and the Minister's incomes are probably high enough for us to manage to pay for our homes without the interest deduction.
Statsrådet Andreas Carlson (KD)
Madam Speaker! I would like to thank the interpellor and the participating members for the debate. I suspect that we will continue in the next session of the interpellation debates in the chamber, which may possibly be broadcast on television somewhere.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.