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The Swedish Housing Market: Better Allocation via Less Regulation

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  • Felix Hüfner
  • Jens Lundsgaard

Abstract

While several sectors in the economy have been deregulated, the Swedish housing market remains distorted, hindering an optimal matching of supply and demand. In the rental market the rent setting framework with its focus on cost-based rents in the public sector prevents a price response, leading to long queues in some regions and vacancies in others. Many Swedes that would have preferred otherwise are driven into the owner-occupied segment, where prices are increasing strongly, and rising above an estimated fundamental value. The supply of new dwellings is made more difficult by an uncompetitive construction industry, coupled with cumbersome planning regulations and few incentives for municipalities to issue more land. On the fiscal side, real estate taxes are below neutral levels, implying an indirect subsidy to housing. This paper presents a review of the recent steps to abolish real estate taxes and also proposes comprehensive reform of regulations in the rental housing sector. This paper relates to the OECD Economic Survey of Sweden 2007 (www.oecd.org/eco/surveys/sweden). Le marché du logement suédois : Moins réglementer pour obtenir une meilleure allocation des ressources Alors que plusieurs secteurs de l’économie ont été déréglementés, le marché suédois du logement reste soumis à de fortes distorsions qui entravent un rapprochement optimal de l’offre et de la demande. Sur le marché locatif, les loyers sont essentiellement fonction de ceux que pratique le secteur public dans l’optique des coûts, ce qui empêche une réaction normale des prix et crée de longues files d’attente dans certaines régions, tandis que des logements restent vacants dans d’autres. Un grand nombre de Suédois sont contraints malgré eux d’accéder à la propriété, avec des prix en forte hausse, et augmentant au dessus d’une valeur fondamentale estimée. L’offre de logements neufs subit les effets négatifs d’un manque de concurrence dans le secteur de la construction, se doublant de très strictes règles d’urbanisme et d’une faible incitation des communes à classer de nouveaux terrains en zone constructible. Sur le plan fiscal, l’impôt foncier est déjà inférieur au niveau de neutralité, ce qui veut dire que le logement est indirectement subventionné. Ce document passe en revue de manière critique les récentes étapes pour supprimer les taxes foncières et propose également une réforme compréhensive des réglementations du secteur locatif. Ce document de travail se rapporte à l’Étude économique de l’OCDE de la Suède 2007 (www.oecd.org/eco/etudes/suede).

Suggested Citation

  • Felix Hüfner & Jens Lundsgaard, 2007. "The Swedish Housing Market: Better Allocation via Less Regulation," OECD Economics Department Working Papers 559, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:559-en
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    File URL: http://dx.doi.org/10.1787/175230504175
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    Cited by:

    1. Caldera, Aida & Johansson, Åsa, 2013. "The price responsiveness of housing supply in OECD countries," Journal of Housing Economics, Elsevier, vol. 22(3), pages 231-249.
    2. Rima Turk, 2015. "Housing Price and Household Debt Interactions in Sweden," IMF Working Papers 15/276, International Monetary Fund.
    3. Duffy, David & McQuinn, Kieran & Morley, Ciara & Foley, Daniel, 2015. "Quarterly Economic Commentary, Winter 2015," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20154, April.
    4. Morley, Ciara & Duffy, David & McQuinn, Kieran, 2015. "A Review of Housing Supply Policies," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    5. Li, Jieying & Zhang, Xin, 2017. "House Prices, Home Equity, and Personal Debt Composition," Working Paper Series 343, Sveriges Riksbank (Central Bank of Sweden).

    More about this item

    Keywords

    house prices; housing supply; housing taxation; impôt foncier; marché locatif; offre de logements; prix des logements; rent regulation; rental housing; réglementation du secteur locatif; Suède; Sweden;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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