Response to interpellation 2023/24:597 on housing construction
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD argues that the housing market is in a tough economic situation due to high inflation and high interest rates 1. KD believes that measures must be precise and not risk fueling inflation 2. KD argues that previous good years should have been utilized to build away the housing shortage and address structural problems 3. KD argues that a lack of decisive action in the past caused the situation and that shorter lead times as well as simplified regulations would have made the calculations work out 4. KD believes that further measures must not fuel inflation and that the solution is to bring down inflation 4. S argues that the construction sector is in crisis 5. S believes that the government is not doing enough to alleviate the consequences of inflation 6. S argues that many houses were built under Social Democratic rule 7. S believes that construction loans, construction stimuli, energy efficiency, and a state-owned real estate company are needed to solve the acute housing crisis 7.
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! Sofia Amloh has asked me if I intend to take any measures to counteract the situation on the housing market and its consequences.
I am well aware of the seriousness of the situation regarding the decline in the housing market and its consequences. Sweden is in a tough economic situation where housing construction has decreased significantly as a result of global factors that have contributed to high inflation and higher interest rates in Sweden and in the rest of the world.
The high inflation and the higher interest rates have affected households' demand for housing while simultaneously contributing to high production and financing costs for the construction companies. The Riksbank has recently assessed that the risk of inflation becoming entrenched at too high levels has decreased and that the policy rate can therefore probably be lowered earlier than what has been indicated until now. In the long run, such a development will contribute to a recovery in the construction industry.
The government is implementing various measures to mitigate the effects and save jobs in the construction sector. The government has proposed that the ceiling for the rotavdrag (maintenance deduction) be temporarily raised during 2024 to promote employment in the construction and civil engineering sector. It is a measure that can make a difference when demand wanes in the construction and civil engineering sector. To simplify the rules for building, the government has also given a mandate to Boverket regarding relaxations of building requirements for student housing.
On behalf of the government, the Financial Supervisory Authority has recently investigated how the exemption from amortization requirements that can be granted for newly produced housing is used in practice. Additionally, the government has introduced two incentives for municipalities that adopt detailed plans that enable small house construction and conversions from premises to housing. The planning incentives are searchable from April 2 of this year for plans adopted from January 1 and onwards.
The Government is closely following the developments within the construction and housing sector and does not rule out that further measures may be needed.
Sofia Amloh (S)
Madam Speaker! I think it cannot go a whole Friday with interpellation debates with the Minister here in the chamber without us talking about the construction crisis, so we shall have that debate now.
It is actually the case that there is a standstill in the construction sector. This has enormous consequences here and now in the form of companies going bankrupt and construction workers being laid off and entering unemployment. Housing that needs to be built is not being built. Elderly care homes and schools that need to be built are not being built.
The effects are felt on two fronts - the housing shortage is growing while the industry is in crisis. The number of unemployed in the Byggnads a-kassa is now at the same level as during the worst period of the pandemic. This is a construction crisis that can be compared to what happened during the 90s crisis.
This has consequences not only here and now but also for a long time to come. Stockholm Chamber of Commerce's report The Note on the Construction Crisis shows that the construction crisis continues, and if no measures are taken, Stockholm County and Uppsala County could suffer a production loss corresponding to over 340 billion kronor during the years up to 2030. For the whole country, the production loss could reach up to 1,000 billion kronor.
In addition to the housing shortage worsening, employment will continue to decrease sharply in the broad construction sector. This will result in skills being lost. It will also result in losses that are difficult to replace, especially in the short term.
Just over a month ago, the trade unions Byggnads and GS demonstrated and handed over a petition with over 18,000 signatures demanding that the government do something about the crisis. The parties in the labor market are showing with all clarity that they have had enough of the government's reluctance to act against the extensive consequences that are currently being felt across the entire country. It cannot be overemphasized that it is time for political action, says the vice managing director of the Stockholm Chamber of Commerce. The government responded that measures are being taken. The reality, however, is that the house is already burning, and a hand fire extinguisher will not be enough to save the house.
Madam Speaker! The Government is closely following the developments and does not rule out that further measures may be needed. That is very good, but how much worse must the situation on the market become before the Government makes an effort to take more measures?
Statsrådet Andreas Carlson (KD)
Madam Speaker! I really want to emphasize that I agree with the problem picture that Sofia Amloh expresses here in the chamber. We have a very tough economic development in the housing market. When inflation is high and the economy is heading downwards, the construction and housing sector is affected as a result of the uncertainty that arises, the higher interest rates, and the increased costs for financing and production of housing.
There is no simple measure or solution to conjure this away, but it is a consequence of the high inflation - that is the background to the very sharp decline.
If the house is burning – to continue the metaphor – it is important that the measures one takes do not correspond to extinguishing the fire with gasoline. The measures one takes must be accurate and must not risk fueling inflation. What is important here and now is to take responsibility and to see the bright spots that exist in that inflation is heading downwards and that the Riksbank, according to assessments, may come to lower the interest rate earlier than planned.
It is a root cause of why we are where we are. Therefore, it is important to continue to hold on and take responsibility and not blow the danger over when it comes to the high inflation.
This is not the only thing we are doing from the government's side. We are also taking measures to simplify the rules for building. It is important to shorten lead times in the planning and building process and to increase the availability of buildable land, especially in attractive locations. We are working so that more people will have the opportunity to take the step into the owner-occupied housing market and to utilize the existing stock more. There is, for example, an opportunity to convert premises into housing, and this needs to be utilized more than has been done previously.
All this is a response to structural barriers that have existed and influenced housing construction for a long time. Some of these measures – I have no illusions here – will lead to an effect in the medium or longer term. Therefore, it is important to consider and have proposals that can mitigate the effect on the acute situation here and now. They must however – again – be accurate and not risk making the situation even worse with the consequence of even more people losing their jobs and even more companies going bankrupt.
The government is working very actively to step by step achieve a better functioning housing market. I have recently met with the parties in the labor market. I have many meetings with people, companies, and representatives for actors who describe the situation roughly as I and the members have described it today. The measures being taken should, of course, address the situation as it stands here and now, but they must not risk making the situation even worse by causing inflation to rise.
We have received proposals from the government's coordinator for the new industrialization in northern Sweden and the housing supply there. He has submitted proposals that we now have on the government's table; we recently received them. It is about using Norrlandsfonder and about using the state credit guarantees that already exist in a different way. There are also proposals regarding rental loss guarantees. These proposals aim to bridge the situation that exists here and now. They are being prepared and analyzed now, of course, because we have received them.
Parallel to this, we are also working on the structurally targeted reforms. It would, of course, have been better if we had had them in place already before the situation became as tough as it is now.
Sofia Amloh (S)
Madam Speaker! I would especially like to thank the Minister for what he said at the end regarding what he has received from the coordinator concerning the housing shortage in northern Sweden. It hinders development there, which is incredibly important in the future. I and many other Social Democrats are very curious about what the government will answer to this and how they intend to act. This is something we are particularly looking forward to.
SD is the entire government base. SD argues that the housing shortage would disappear with greater emigration. Does the Minister of Justice share the Sweden Democrats' view on how this can be solved and why the housing shortage exists?
Of course, one needs to fight inflation; we are in complete agreement on that. There is probably no one in the chamber who is not in favor of it. Of course, inflation must be in focus. It is the root of very much that many people are suffering from right now. The Social Democrats argue, however, that while fighting inflation, one must also be able to alleviate the consequences of it. I mean that this is something that this government does very little of.
The government says that inflation needs to be fought, and then one follows the question. You listen and things come your way. It is petitions and report after report. We see company after company going bankrupt and which most likely will not come back. They have to pay a high price. We have construction workers who are going into unemployment. We get a skills shortage that will not be able to be addressed in the near future. These are the effects of the government not managing to simultaneously fight inflation and alleviate the outermost consequences of it.
My question to the Minister is: What does the government say to all the construction workers who are going into unemployment? They know that there is a housing shortage and that they are needed in the Swedish labor market, but in reality, they are going into unemployment. It then seems as if they are not needed and as if they do not need to work. I do not know how they feel. Are they redundant? Are they not needed in the labor market? Are they not needed in the housing market? Is it not necessary to build housing today? This is the price of not acting more and not taking more measures. It happens, even if one is to fight inflation.
What does the Minister say to all construction workers who are entering unemployment? What does the Minister say to the Vice CEO of the Stockholm Chamber of Commerce when she emphasizes that special political action is required right now?
Statsrådet Andreas Carlson (KD)
Madam Speaker! Individual parties must answer for their own proposals. I represent the government's policy, and the specific proposal the member highlights is not the government's response to the housing shortage.
I am pleased that Sofia Amloh agrees that inflation is an important part of this. Sometimes it does not sound like that in the debate, but rather as if there are quick measures that can solve the problem. But the insight that it is inflation that lies behind the high financing, production, and interest costs and the uncertainty means that it is there we must put our collective pressure and powder and drive a responsible economic policy that does not risk worsening the situation. I have accounted for some of the measures that the government is taking to mitigate the effects.
Sofia Amloh asks what I say to the construction workers who are going into unemployment. It is, of course, a very concerning situation. Something that is also concerning, perhaps not for the individual but for housing construction in Sweden, is that many enter other professions and work tasks because the demand for labor is high in other sectors. It was a lesson from both the 90s crisis and the financial crisis that people were lost in the construction and housing sector who entered other important sectors in society. The lagging effects when the economy then turned became very noticeable because there was not enough labor to meet the need in housing construction.
It is against this background that the increase in the roof deduction is part of saving jobs in the construction and housing sector. There is also an open system for support for short-time work. According to that system, support can be given for a limited period to employers who, due to temporary and serious economic difficulties, need to introduce short-time work. It is a support that is handled by Skatteverket and is given after a decision on approval for support.
It is an important issue to secure the supply of skills and to have a competent workforce in the construction sector moving forward, because the housing need is very large, not least in the northern parts of the country. But everywhere where we see a fantastic development with new industrialization, housing is either an enabler or a bottleneck for the development.
It would, of course, have been better if more structural reforms had been in place before we entered a period of high inflation and recession. We have a period behind us with very favorable economic development, growth, and a boom when money was almost free. There has therefore been an opportunity to build away the housing shortage. But let me remind the member that during not a single one of the years her party governed Sweden did the number of completed homes meet the needs established by Boverket.
We are now in a tough economic situation with high inflation, significantly increased construction prices, and raised interest rates that pressure both households and construction companies. We would, of course, have been better equipped if we had utilized the good years to build more housing in Sweden and addressed the structural problems that hinder development in the housing market regardless of high or low economic cycles, but which are extra palpable in the tough economic situation we are in now.
Sofia Amloh (S)
Madam Speaker! Let me be very clear that under the Social Democratic government, there were very many construction cranes all over the country, in both large and small municipalities. An incredible amount of housing was built - in contrast to now, when hardly anything is being built and it is at a complete standstill.
I agree when it comes to inflation, but then one needs to act. A government cannot just blame bad times but must show decisiveness. The Social Democrats have shown that in times of crisis, not least during the pandemic. Many extra budgets were presented then to handle the consequences of the crisis.
Madam Speaker! Construction credits and construction stimuli are needed to speed up housing construction. Further proposals from the Social Democrats to solve the acute construction and housing crisis are energy efficiency and a state-owned real estate company.
The Minister for Housing does not seem to have the mandate to do what is required. I understand that he cannot comment on other parties' political positions, but it must be problematic when the government base has a completely different view of the construction crisis than the government. It matters.
Can the minister use his final contribution to answer what he intends to do about this, or does he intend to use it to blame Social Democratic governments?
Statsrådet Andreas Carlson (KD)
Madam Speaker! I may try to do both in my two minutes. It is actually the case that the situation we have now is the fruit of years where we admittedly saw more construction cranes, which is not strange since we now have a recession and high inflation. But not during a single one of the years that the Social Democrats were in power were the number of homes needed according to Boverket completed.
That you are setting higher demands on another government during a recession and high inflation, I thank you for, because previously there was a lack of decisiveness to tackle the structural problems, increase construction even further during a boom, and make Sweden better equipped in the current situation. Above all, shorter lead times and simplified and improved regulations would have made the calculations work out to a greater extent. Everyone knows that time is money, and now money has once again become something that costs.
Madam Speaker! In my response, I stated what the government is doing to mitigate the effects. We do not rule out further measures. But these measures must not counteract the objective and fuel inflation, because then we will end up in an even tougher situation ahead. We will, step by step, ensure that the housing market is put in better shape. However, it is not done in a heartbeat. There is no single simple measure that solves all problems; instead, a series of steps in several different areas are required. We will have every reason to return, and I do not, as stated, rule out further measures to mitigate the effects in the tough situation many find themselves in. But the solution remains to bring down inflation, for it is the basis for many of the problems we see.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.