What does housing cost, and is building keeping pace with people moving in?

Debt, prices and home ownership in the Nordic countries

Sources: Eurostat, based on data from the national statistics offices. Debt is household loans as a percentage of disposable income before interest deductions. Prices come from Eurostat's house price index and are not adjusted for inflation. Ownership comes from the EU survey on income and living conditions and refers to the share of people. The latest available year differs between countries and is shown in brackets. The countries have different forms of housing, and almost all Swedish tenants are reported as paying market rent despite rent control, so the figures are only roughly comparable.

1. What happens to rents if rent control is lifted?

   The research comes mainly from the United States. When Cambridge, Massachusetts, abolished rent control in 1995, property values rose sharply, even in buildings that had never been controlled. When San Francisco instead extended rent control in 1994, tenants could stay put, but landlords cut the number of rental units by 15 percent by selling them or converting them. This probably pushed up market rents across the city in the long run.

   Autor, Palmer and Pathak (2014), Journal of Political Economy. Diamond, McQuade and Qian (2019), American Economic Review.

2. How do queues for rental flats affect who gets to live where?

   In central Stockholm, the flats whose rent was furthest below an estimated market rent required on average 21 years in the queue, against 10 years where the gap was smallest. High income households got a bigger discount than low income households, even with the same queue time, because they rent larger flats and can wait longer in the queue. The OECD finds that rent control reduces the supply and quality of housing, especially for low income households.

   Donner and Kopsch (2023), Journal of Housing and the Built Environment. OECD (2025), OECD Economic Surveys: Sweden 2025.

3. Why is so little being built?

   Boverket points to three reasons right now. Construction costs rose sharply in 2022 and 2023 and remain high, household purchasing power hasn’t fully recovered, and new homes have to compete with existing ones. In the longer term, American research suggests that strict rules on new building in many cities act as a hidden tax, pushing prices far above what it costs to build. The OECD writes that slow planning and building permit processes push up prices in Sweden too.

   Boverket (2026), Construction forecast June 2026. Glaeser and Gyourko (2018), Journal of Economic Perspectives.

4. Does building expensive new homes help?

   Yes, even for those who cannot afford to move into them. In Helsinki, new market rate flats near the centre set off moving chains that quickly reached areas and people with middle and low incomes. Finding a home became easier even where nothing new was built.

   Bratu, Harjunen and Saarimaa (2023), Journal of Urban Economics.

5. Does the mortgage interest deduction make homes more expensive?

   Yes, according to several studies. When Denmark reduced the interest deduction for middle and high income households, just as many owned their homes as before. But they bought smaller and cheaper homes, borrowed less and prices fell. An American model study finds that removing the deduction would lower prices, reduce debt and lead more people to own their home. The OECD judges that tax support for owner occupied housing pushes up prices in Sweden.

   Gruber, Jensen and Kleven (2021), American Economic Journal: Economic Policy. Sommer and Sullivan (2018), American Economic Review.

6. Does the amortisation requirement work?

   It made people borrow less. According to Finansinspektionen's evaluation of the 2016 requirement, new mortgage borrowers on average borrowed almost 9 percent less relative to income and bought homes just over 3 percent cheaper than they otherwise would have. It was mainly older buyers, families with children and buyers in Stockholm and Gothenburg who were affected, young buyers much less so.

   Finansinspektionen (2017), FI Analysis 2017:10.

7. Are high debt and house prices a risk to the economy?

   It depends mostly on the borrowing. A study of 17 countries over 140 years shows that credit fuelled housing bubbles are the most dangerous. When they burst, recessions are deeper and recoveries slower. When US house prices fell after 2006, households cut consumption more for each dollar of lost housing wealth where they were poorer and more indebted. The Riksbank warns that highly indebted Swedish households may need to cut consumption in a downturn and so deepen it.

   Jordà, Schularick and Taylor (2015), Journal of Monetary Economics. Mian, Rao and Sufi (2013), Quarterly Journal of Economics. Riksbanken (2026), Financial Stability Report 2026:1.

8. Does a housing shortage stop people moving to where the jobs are?

   Several studies suggest so. In the United States, researchers have argued that building restrictions in high wage cities such as New York and San Francisco kept people from moving there and dragged down national growth. A later review found errors in the original calculation and that the effect is probably much smaller. Taxes on home purchases also hold people back. When Finland raised the tax on buying flats, households moved less. Rent control works the same way, and in San Francisco tenants with controlled rents moved 20 percent less.

   Hsieh and Moretti (2019), American Economic Journal: Macroeconomics. Eerola, Harjunen, Lyytikäinen and Saarimaa (2021), Journal of Urban Economics. Diamond, McQuade and Qian (2019), American Economic Review.