Deficit of housing in metropolitan regions
News After a relatively long period of low housing construction, new construction has picked up and the number of completed homes in 2016 is at its highest level since the early 1990s. This is a positive development as most municipalities state that they have a shortage of housing. In this economic commentary, the author provides an overview of the need on the housing market based on available historical data on new construction, housing stock and population growth. The commentary also discusses differences between need and demand and how increased construction can affect the situation on the housing market.
It is difficult to determine exactly whether, based on a needs perspective, there is a surplus or a deficit of housing and beds as the results vary depending on how the figures are calculated and what assumptions are made. In addition, there are limitations in the data. Nonetheless, the results indicate that there is a shortage of both homes and beds in the Stockholm region and that the deficit is greater than in Sweden's other two metropolitan regions (Greater Gothenburg and Greater Malmö). On the aggregate level, in the country as a whole, there does not seem to be any major deficit.
The recent increase in construction seems to be relatively well in line with the demand. The housing being built is mostly 1-3 room apartments with different forms of tenure in regions that are also experiencing the highest population growth. What is difficult to establish, however, is whether the housing also matches households' purchasing ability.
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By Goran Katinic, who works in the Financial Stability Department of the Riksbank.
The Riksbank's Economic Commentaries contain, for instance, short analyses and debate articles. The opinions expressed in Economic Commentaries are those of the authors and are not to be seen as the Riksbank's view.