The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almost completely unregulated market of sub-letting.
Rent control never works.
Rent control never works.
The biggest issue here is the total mortgage interest you pay is already 5% and EURIBOR is set to continue growing (mortgage interest is not fixed, it's recalculated every 6 months). For a lot of apartments in the city centre, the rental price is less than the equivalent mortgage payments if you were to buy today. A crash is likely coming, and the first thing that will be cut is new construction.
However most people want apartments in the city... Last year I moved 20 minutes drive / 40 mins by bus into the suburbs and bought a 140sqm house. The price I paid was less than a new 50sqm apartment would cost anywhere close to the main parts of the city.
But the rent-controlled first hand contracts system is ridiculous - that needs to be abolished to have a true market on direct rentals - so all residents could rent directly from the housing companies without landlord middlemen.
It’s completely bonkers…
Much better to build a huge flat and rent it out.
Thankfully me and my girlfriend can afford and we're therefore planning to buy and lose our contract, but to be honest it probably going to go to someone who needs it. Because owning your own place, being able to modify it to your liking and having people that live there take care for it just makes it much better to own instead (in my opinion).
That's kind of like saying "What's so bad about zoning restrictions? I own a house and it's not affecting me at all!". Of course it's great for you and other people who have a rent controlled unit. The OP explicitly acknowledges this. The issue is for everyone else who doesn't have a rent controlled unit.
It’s not perfect by any stretch but all renters across the province do benefit equally.
If everyone was a renter and there were no barriers to getting a new lease in a new city - rent control would be absolutely fine - because it wouldnt do anything at all.
If somethings only beneficial if is benign, it sounds more like cancer than welfare.
So what is the core problem? The core problem is that there aren't enough dwellings in the city for everybody that needs to be there. If there were they wouldn't be so expensive. So figure out what you need to do to build more dwellings.
Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to shortages down the road and only the lucky few with money or connections will be able to afford.
We had that in communism, except ironically, not with housing but with food and goods. Now the west has the opposite problem, everyone has plenty of food and iPhones, but no housing. Have Swedes never learned about this and the functioning of supply/demand in their excellent school system?
The reason you are looking for is called corruption.
There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies.
Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well.
It has gone completely mad.
But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.
It could just be democracy. Homeowners are an important vote bank and they generally want house prices to rise. A government that substantially increased housing supply would cause house prices to drop, which would make homeowners unhappy.
People who don’t have houses yet.
Everybody else wants housing to continue to be a growth investment, and thus increasingly unaffordable. Developers want to make & sell more expensive things. Lenders want to make more & bigger loans. Existing owners want the value of their most valuable asset to go “up & to the right”.
That’s a very big hurdle to overcome politically. Even worse in the US where real estate investments are a central pillar of the broader economy, and if the “growth investment” patina of it starts to fade, then a cascading catastrophe will likely follow. The situation might be untenable as prices keep going up, but there are so many incentives working against any kind of intervention, that I never expect one to occur.
Further, affordable housing (as in, literally affordable, and not under some means-tested scheme) means more opportunities for me to buy further properties.
Acting like non-NIMBYs don't exist is harmful and does a massive disservice to them. They do exist and they need to be praised instead of ignored.
You just described every Californian who upsized by moving out of state. They definitely wanted their condo, bungalow, or shack to get top dollar in their market.
At one point if you have 100 billion, it doesn't matter if you have 101 or 200. The capitalism has reached its end and the rich are preparing us for the so called fourth industrial revolution.
For their sake I hope the title of one Aerosmith song will not become reality. https://www.youtube.com/watch?v=ZK__9UIN5gk
> NIMBYsm in disguise
Yes, this is the real problem: the same capitalist incentive structure that pulls forward the future returns of a new housing investment also pulls forward the consequences of future supply normalization onto current owners. Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do.
Capitalism causes NIMBYism. Which is the real problem.
Do you disagree that the malincentives exist? Or do you think that clueless poor people are a more effective political bloc than clued-in rich people pursuing enormous financial malincentives?
Exactly this. People love having rent control until they want to change apartment to upsize, downsize or move, and then realize they can't because the market is FUBAR.
It causes the problem by diminishing the returns for new construction. That in turn disincentivizes people willing to fight through the bureaucracy to get new construction approved.
>Capitalism also guarantees that these owners are the ones with power. It gives them the means and the motive to torpedo new development. So they do.
I'd be sympathetic to this if all the home owning NIMBYs are funding super-PACs or lobbyists to "torpedo new development", but they're not. They're just people showing up to local government meetings in their spare time.
Presidents don't make zoning decisions. Next time you attend a zoning meeting, take a good look at the people who are most passionately creating friction (or their power base, if they are outsiders). You will find a bunch of property owners looking after their property values.
That's... exactly what I was arguing for? In the subsequent sentence:
>They're just people showing up to local government meetings in their spare time.
> spare time
No, not spare. Stopping new construction makes them money, sometimes a lot of money. They are expecting a large, dollar-denominated (or Krona-denominated) return on their investment of time, paid for by future renters and buyers who will not have the additional options they are so diligently trying to torpedo.
NIMBYism is driven by status incentives. Purely capitalist would be to rip down your house and put apartments on it. Even if your neighbours do that, then suddenly your own property value goes up. The price of a square foot of land in NY is high for a reason - density drives up land values (that’s a large part of why developers develop!)
I don’t want apartments next door to me because I don’t want apartments next to me. Nothing to do with some sort of valuation calculation.
Which leads me to this crazy idea that what if the problem is instead a… lack of total amount of housing? Sweden is incredibly slow, expensive and bureaucratic to build new housing in, yet we’re urbanizing just as much as anyone else. To me, the government should have a clear policy goal of having housing supply keep up with population growth, at the very least. Now, I care less about HOW (everyone can argue about that until eternity) and more about just ensuring it happens, and not lagging behind decades. If politicians drag their feet, it should automatically switch over to dropping all non-essential regulations (that would put a blowtorch to their asses).
In either case, I’m not in Sweden atm and I don’t feel particularly hyped about the coerced gambling I’d have to participate in if I were to settle there again permanently. It’s a shame, because it really destroys our ability to attract international talent in the startup world and so on.
In italy 2nd hand rent is illegal… You just need that imo