In 2016, Sweden’s National Housing, Building and Planning report made headlines with a sobering statistic: more than 255 out of 290 municipalities reported a housing shortage. Despite record levels of construction at the time, demand still far outstripped supply—especially in metropolitan areas like Stockholm, Gothenburg, and Malmö.
So why, even during a period of high building activity, did Sweden continue to struggle with housing shortages? The report pointed to a mix of planning bottlenecks, municipal incentives, and land costs. But one of the most overlooked factors behind these shortages is something that resonates far beyond Sweden: rent control.
What the Report Found
The 2016 report emphasized that while construction levels were climbing, they couldn’t keep pace with years of undersupply. Municipalities often lacked the incentive to approve higher-density projects, and planning appeals created long delays. Developers faced high costs and risks, which discouraged new housing starts.
But beyond the planning process, Sweden’s rent regulation system played a quiet but powerful role in discouraging investment. Developers knew that new rental projects would eventually be constrained by below-market rent limits, meaning the long-term return on investment would be capped. That made financing and risk-taking harder—and often pushed builders toward condominiums rather than much-needed rental housing.
The Negative Effects of Rent Control
Rent control is often presented as a compassionate solution to affordability, but Sweden shows us how the unintended consequences can be devastating:
- Discourages New Construction: When future rents are capped, developers pivot away from building rental housing altogether. This worsens shortages in the very sector meant to provide affordable options.
- Creates Misallocation: Rent control keeps households in units that no longer match their needs (for example, an empty nester staying in a three-bedroom apartment because the rent is artificially low). This reduces turnover and traps families on waiting lists for years.
- Worsens Inequality: In Sweden, long queues for regulated apartments meant that access often went to those with connections or time to wait, rather than those most in need.
- Pushes Prices Elsewhere: When regulated rents are below market, demand spills over into the unregulated sector, driving up prices for newly built or non-regulated housing.
- Limits Maintenance & Upgrades: Landlords facing capped rental income have fewer resources—or incentives—to reinvest in their properties, leading to deterioration in quality over time.
As Swedish economist Assar Lindbeck famously put it:
“In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
His words, though stark, reflect the lived reality of countless Swedish families stuck in queues and crumbling apartments.
The Human Cost: Waiting a Decade for an Apartment
The most visible outcome of Sweden’s regulated system is the staggering waiting time for a rental apartment.
- In Stockholm, the average wait for a first-hand rental is now around nine years—with many applicants waiting well over a decade for a centrally located unit.
- In Malmö, the wait is typically 3–4 years, still long compared to international standards.
- For student housing in Stockholm, the wait averages 4.5 years, while senior housing can take 11 years or more.
That means entire life stages—graduating college, starting a family, even reaching retirement—can pass while waiting in line for an affordable, regulated rental. Instead of promoting fairness, rent control has created a system where the lucky few benefit from artificially low rents while newcomers and younger generations are locked out.
A Better Path Forward
The Swedish experience highlights that solving housing shortages requires addressing both supply constraints and demand distortions. Streamlining planning, aligning municipal incentives, and ensuring land availability are critical steps. But equally important is moving away from rigid rent control policies that choke investment and trap tenants in an inequitable system.
Instead, targeted housing assistance programs—like housing vouchers or means-tested subsidies—can help families in need without discouraging builders from adding to the housing stock. Policies that encourage both private and public actors to build more housing will do more to lower rents long-term than any cap ever could.
Final Takeaway
Sweden’s 2016 report serves as a cautionary tale. Even in a country committed to building, housing shortages persisted—and rent control only made the problem worse. For cities and nations grappling with affordability today, the lesson is clear: we cannot regulate our way out of a housing crisis. We must build our way out.
Appendix: Sources & Further Reading
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Swedish Expert Group on Public Economics (ESO), “Housing Supply, Municipal Incentives and Planning” (2016) — English summary PDF
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Government Offices of Sweden, National Reform Programme 2016 — Link
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Bostadsförmedlingen Stockholm (Stockholm Housing Agency) — Average wait times 2023 — Link
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Riksbank, Perspectives on housing construction in Sweden (2018) — PDF
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Terner Center for Housing Innovation, UC Berkeley, The Swedish Housing System (2020) — Link
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La Fabrique de la Cité, Stockholm: A universalist vision of housing tested by shortages (2018) — Link
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Assar Lindbeck (1971), The Political Economy of the New Left (famous quote on rent control).
