Two year wait for Stockholm flat

[Fusey]

Two year wait for Stockholm flat: report

The wait for a rental apartment in Stockholm averages 104 weeks, rising to as much as 20 years for attractive areas. In many comparable EU cities apartments can be found immediately and often at little or no extra cost, a new survey shows.

"We have known for a long time that the waiting time for a rental apartment in Stockholm is longer than in the rest of Europe. But that the difference was this great surprised even us," said Mia Enayatollah at the Swedish Property Federation (Fastighetsägarna), which has conducted the survey.

The federation compared the waiting lists and number of vacant apartments for rent in eight European cities of an equivalent size to Stockholm.

In Stockholm the average prospective tenant has to search for two years to put pen to paper on a rental contract. In six of the cities studied in the comparison there was no wait at all, and in the seventh, Amsterdam, the search took one to five weeks.

"This is a result of the fact that in Stockholm we have had a politically managed market for rental apartments for decades," said Mia Enayatollah.

The survey also shows that neither long waits nor a strict political regulatory system bring rewards in the way of lower rents.

The survey in fact shows that Berlin, where an apartment can be found without delay, enjoys the lowest rents of the eight cities studied.

Furthermore Brussels, Amsterdam and Madrid all have apartments available, with little or no wait, at rental levels similar or only slightly higher than Stockholm, the only city in the comparison with a general rent control system in place.

The survey looks at the market for rental apartments in Stockholm, Oslo, Copenhagen, Helsinki, Brussels, Amsterdam, Madrid and Berlin. The wait times were compiled with statistics for 2009 and rents were compared according to the Bloomberg Ikea Billy bookshelf index.

The Local spoke to Anna Wennerstrand at the Swedish Union of Tenants (Hyresgästföreningen) on Monday who argued that regulated rents have nothing to do with the problem.

"The short answer is that too few apartments are built. It is quite a particular market that is difficult to compare."

When asked what should be done about Stockholm's problems, Wennerstrand replied:

"The government needs to offer more support. Their policies favour the construction of tenant-owner apartments and houses."

As all longer-term visitors to Stockholm are acutely aware, there exists an informal "second-hand" rental market that allows those in possession of rental contracts, and owners of tenant-owner (bostadsrätt) apartments and houses, to sublet their homes.

This market is not directly controlled but is subject to the same regulations with regard to rents that apply to the regular rental market. In reality rents are often much higher in reflection of the relatively high costs paid for the properties.

Furthermore, "first-hand" rental contracts often change hands for significant sums of money.

http://www.thelocal.se/24858/20100208/

[huggkruka]

http://www.dn.se/sthlm/hon-ar-nummer-200000-i-stockholms-bostadsko-1.706498

With a waiting line of 200,000+, it's not that strange... The article is from 2007, but a recent article shows that almost 15000 apartments has been built since 2006. http://fsve.se/dev/article.php?id=4427 So it's still a far cry from 200,000.

From the older article: "Last year(2006) 1400 people recieved an apartment within a year. In 2002 times were harder; only 40 apartments were recieved in less than a year.

I think most Swedes finds this as ridiculous as foreigners do.

[Swede]

We do, and those of us who know Stockholm's history know that it's been much worse. At one point in the late 1800s there used to be a tent-city just on the far side of Eastside Stockholm.

15000 apartments might sound like a decent number in 3-4 years, but the City grew by almost 15k a year, the metro by 30-40k a year... construction is no-where near keeping up with demand. Our planning process and the oligopolistic structure of the construction companies don't exactly help.

[Fusey]

I remember hearing about Oslo having similar issues. I think that city has started to address it, though, because after visiting the city last summer it was impossible not to see a crane in just about any direction (having all of that oil money certainly hasn't hurt, either).

From last summer:

[CentralGrad258]

Pfft, 2 years is nothing. My parents waited 7 years for a flat in 1980s Kiev. So take heart Swedes, you're doing 5 years better than a disintegrating communist society.

[sznter]

Got into a couple of Swedish universities last year, ignored all of them though as finding a flat of some kind there would have been such a difficult mess.

[Marcu]

Whatever happened to prices rising to levels where the quantity demanded is in line with the quanity supplied? Is there some mechanism keeping prices artifically low?

[VivaLFuego]

Originally Posted by Marcu

Whatever happened to prices rising to levels where the quantity demanded is in line with the quanity supplied? Is there some mechanism keeping prices artifically low?

The article implies that all flats are rent-controlled.

I'm rather surprised the populace tolerates this. By all means it makes sense to enforce some measure of zoning/planning/preservation controls, but using a legislative sledgehammer on both the supply and demand sides of the housing market seems to only make everyone's life more difficult.

[Swede]

Originally Posted by Marcu

Is there some mechanism keeping prices artifically low?

Yes there is. I don't remember when it started, but it applies to all rentals (in the whole country iirc) and the idea behind it is rent should be based on the user value (location not really included). If it were removed there'd be havoc since the market wouldn't find a new equilibrium at once. IMO a reasonable approach would be for that law not to apply to new units.

[KVNBKLYN]

Originally Posted by Swede

IMO a reasonable approach would be for that law not to apply to new units.

For what it's worth, that's how rent stabilization (ie, rent control) works in New York. New construction is not subject to rent stabilization (unless the developer got some sort of tax break, and then the stabilization only usually lasts 20 years). Rents over a certain amount also "destabilize" the apartment (I love that term), so when an apartment's legal rent reaches $2,000, the apartment converts to market rate. I think the barely concealed ultimate goal is to gradually eliminate rent stabilization.

I'm not sure how I feel about the issue. I don't think rent stabilization achieves its goal of providing affordable housing to people since it only really benefits people who don't move often (which conversely punishes those who do move making the rental market less liquid and making it difficult for people to move for rational reasons, like getting a new job, graduating from college, marrying, divorcing, etc.). However, I think the larger problem is that too much of the housing market in older cities like New York is rental which means there are too many landlords who are only interested in extracting as much rent from tenants as possible. If more units were available to buy (not possible because many cities, like NY, have limited condo conversions for dubious social reasons) then those who've lived in a place for a while will be rewarded with equity and those who need a place to live will be able to buy the apartment they need, but only if external forces don't artificially jack up prices (like low-downpayment mortgages, excessive capital concentration in certain market sectors like financial services, etc).

Is there any discussion of rent control reform in Sweden?

[brian_b]

My good friend in Stockholm (who just recently gave up renting and purchased a flat) said that the shortage was a bit overblown because the waiting list was just to be the first person listed on the lease. Apparently it is very common to have 3rd and 4th levels of subleases - once someone gets an apartment they don't let the lease go when they move out. They just sublease it to someone else.

[Swede]

Well, in a functioning rental market it wouldn't be the norm to be sub-letting (esp. 3rd or 4th level sub-letting since that's usually banned by the owner). The waiting list is a few hundred thousand long, but quite a chunk of this is due to people knowing the situation is so bad that they get in line (the fee is pretty small) just in case. If we had 50k-100k more rental units part the rest of the queue would go away. Not all of it, since some are in it, and stay in it for many years after they start getting offers since they want one in the inner city. To get rid of that part of the queue we'd need more inner city (possible, but fought fiercely by nimbyism and our planners who still think le Corbusier was teh awesome) and possibly market rates on the rents.

@KVNBKLYN - here rent control is a formula applied to ALL rental apartments and have nothing to do with when one started renting that apartment. It's all about size, amenities, quality. If you take too high rent from your renters then you can be forced to pay back the part that's considered too much (mostly applies to sub-letting since the owners have legal departments who avoid setting rents that high).

[pdxtex]

i dont get it?? is rent government subsidized or something??

[SHiRO]

Originally Posted by pdxtex

i dont get it?? is rent government subsidized or something??

A question only an American could ask...

[pdxtex]

apartment hunting in portland.....check craigslist, go check out apartment, fill out application, pay first months rent and deposit. move in. ta-dah....

[Swede]

Originally Posted by pdxtex

i dont get it?? is rent government subsidized or something??

Nope. There is subsidizing for low-income households to afford rent (and for co-ops and houses mortgage interest payments are tax-deductible), but the rent itself is simply illegal to raise too much. Which on the one hand keeps rents manageable even in attractive areas, on the other it both keeps them inflated in not-sop-attractive areas and stifles new construction (somewhat, there's far more pressing issues with the planning process that hinders more).

[village person]

This might be another stupid American question, but where do the 200,000 live for the 2 years that they're waiting... for a place to live?

[R@ptor]

The government should have no say when it comes to rental prices...if you can't afford to live in a major city, don't move there. Period.

These 'rent controlled' apartments also create a huge mess of the apartment market in Amsterdam. Because 70-75% of the apartments fall into that category, the rents of the remaining 25-30% of the apartments on the free market are artificially inflated.

[FerrariEnzo]

Originally Posted by village person

This might be another stupid American question, but where do the 200,000 live for the 2 years that they're waiting... for a place to live?

This stupid American is also curious as to the answer of this question...

[Swede]

Originally Posted by village person

This might be another stupid American question, but where do the 200,000 live for the 2 years that they're waiting... for a place to live?

My guesstimates are that at least a third already have their own place but want a better one, a third live with a second, third or even fourth hand lease (all of which are usually banned by the owners, so not a good situation) and the rest still live with family or move around from friend to friend.