Hacker News Reader

Increase in immigration absolutely increases the demand for housing, but it's often not enough to increase the housing prices alone. Look at what happened in the early 90s during the Yugoslav Wars, Sweden took in more refugees than ever before in history yet the housing prices went down and threw the country into economic recession because of all the investments into real estate.

The financial regulations (or lack thereof) are far more responsible. They're present in all of Sweden's housing crises, this one included. It's the same when you look internationally.

I didn't imply that is was increasing the housing prices alone. If you read it again, I even start my sentence with "Also to add to that..".

> Also in Sweden for apartments, you don't own it. Most apartments for sale is so called "Bostadsrätter" which means you own a percentage of the association that owns the apartment building(s). If the association/organization has a bad economy and can't pay the debt they could be forced to sell the entire apartment building(s) and you'd loose your apartment while still having a loan to the bank.

In the US we call these co-ops and they are mostly an NYC phenomenon. Fun fact, some co-ops don't own the land they sit on, they rent it. And those rents get renegotiated every 30 years, potentially making a bunch of co-op owners suddenly unable to afford their monthly maintenance payments.

Some associations in Sweden does not own the land either (renting from the city) and that rent was increased just some time ago.

The Swedish system sounds closer to a strata system https://en.wikipedia.org/wiki/Strata_title

It's a shitty system, thats why we also now have "Äganderätter" which basically means "owned rights" which means you cannot be forced to sell.

Unfortunately, not many buildings have that.

It's not actually. Unlike strata, in a Swedish "Brf" you don't actually hold title to any real estate.

As the GP says, you own a share in a co-op that itself owns the real estate, and that gives you the right to use the apartment that corresponds to your share.

Something similar to strata title has been discussed for many years in Sweden: ägarlägenheter. I don't know whether anything has ever come of it, however.

Oh really? Where can I get that %25 get ahead in the queue thing? I am an immigrant moved in 2014, and I had to buy an apartment. Because of the freaking long queues. I have never heard of that %25 thing.

Not the mention that residents register their kids at very early age to these rental queues, giving them a way ahead in these queues.

I upvoted. I guess it's the first few words that suggest a racist / popularist post, but it's ontopic IMHO.

You point to an influx of people in the age range that usually rents an apartment. Such local equilibria are quite instable. It only takes a few hundred excess renters to destabilize a local (regulated) market for housing. That leads to crowding out where those that usually would rent, but can afford to buy will buy. A few more buyers will lead to the a dysequilibrium in the next market.

One thing - you expect upward pressure on prices, with more people competing for the same number of houses. The OP is about falling prices.

Well, if you are increasing the population a lot, all of those people are going to need somewhere to live. It isn't really hard to figure that out but most people don't seem to make that connection.

Don't understand how it could even be remotely racist or popular. The statistics of housing prices correlates very well with increases in immigration. Of course, correlation does not imply causation but in this case I'm personally pretty convinced it is the main causation of the extreme increases.

Regarding the falling prices, yes, I believe they were about to fall even before the massive influx of new people (because of all the other things mentioned) but were artificially held up a couple of extra years due to new people.

I'm kind of expecting to see a chain reaction happening next..

- Housing falls

- Investors sell

- Stock drops

- SEK value drops (We are here)

- Import prices goes up

- Goods prices goes up

- Less people are wiling to buy goods due to risk

- Wages go down

- People are let go

- Fewer people are willing to buy goods

- and so on..

Your chain breaks at "less people willing to buy goods due to risk".

SEK going down will push the costs of imports up. It will also make Swedish exports more competitive. Imports being more costly will cause Swedish consumers to substitute imported goods with local alternatives.

The net will be that wages will go up and unemployment will go down. This is good. But the price of goods will become dear to the Swedish consumer and this is bad. And there's a possibility of a wage/price spiral driving up inflation.

Good point!

> Well, if you are increasing the population a lot

But you aren't increasing the population "a lot", now are you?

You linked to a graph that shows around 350,000 asylum seekers over 5 years. What percentage of Sweden's population is that?

It's over 3.5% of the total population, which is equivalent to the U.S. adding about a million people. Also note that they're going to be concentrated into relatively few urban areas, instead of being spread out over the entire country.

Uhh, would be US adding 10 million, not one million.

So, 3.5% over 5 years, is about 0.7% per year. And that's the main cause of the housing problem in Sweden? I'm very skeptical.

> note that they're going to be concentrated into relatively few urban areas

Well surely that's a more likely cause, right? Not the actual number, but how they're being distributed.

Bigger than the population of the third largest city in Sweden https://en.wikipedia.org/wiki/Malm%C3%B6

In 92 there was a five times jump in asylum applications from the previous year (to 69 000 people), can you guess what inflation adjusted house prices index did at that time, and some time on?

It takes great effort to see a correlation between yearly applications (between 2000 and 2008 an average of 25 k persons varying with at most 30%, 7 years below that average and 3 above) and house price index (steadily up 62 % from 2000 to 2007, never failing to increase from one year to another).

https://www.ekonomifakta.se/Fakta/Ekonomi/Hushallens-ekonomi...

https://www.migrationsverket.se/download/18.585fa5be158ee6bf...

Do you have any data on the supply of housing for the corresponding time periods and perhaps the mix of rental v ownership?

So, could you explain why the housing prices fell in the 90s when we took in more refugees than ever before? And why they rose considerably when immigration slowed down in the mid 2000s?

Because, for some reason you're convinced immigration is the main cause of rising housing prices and that the two clearly correlates, even though you can only back that up with stats that are about a decade old, any older than that and the correlation disappears. Maybe I'm missing something?

I don't really have any data from the 90s and I wasn't very old back then so I cannot really say anything about it.

And stop putting words into my mouth. I wrote that I believe immigration is the main cause of the most extreme increases not the main cause of rising housing prices in general.

The difference is that the number of people Sweden has recieved is so much larger 2013-2016 so basically every system we had failed and all municipalities was forced to buy apartments.

If you have stable immigration that are predictable it's easy to plan ahead and adjust the society for it but when it comes like 160k people in one year to such a small country as Sweden everything fails. Of course this will have economic effects such as in the housing market.

Fair enough, I’ll stop putting words in your mouth.

SiemperVernes supplied stats that showed that the correlation goes from weak to non-existant when you look at the past three decades, despite the fact that the early 90s was record years of immigration. You said the correlation was clear and that you think it’s the main cause of rising housing prices, why do you think that? Is it only because of news stories that the local governments had a hard time finding places to rent out? You don’t base it on data?

I would gladly base my thoughts on data but unfortunately when it comes to immigration the government doesn't really publish/store any data of any negative effects immigration could have.

I base my thoughts on the data that is available (which isn't much) and I still think it's different from the 90s because of the much higher number of people that came to Sweden in the last years. Basically no systems worked as you surely know and the government had to abort the whole situation because it became unreasonable even for them. And to my knowledge, Sweden didn't let immigrants jump queues nor buy apartments for them and their wives in the 90s.

For example regarding the lack of data, I am sure they know how many apartments they bought for immigrants but in order for me as a citizen to get that information I would probably have to request it from every single municipality which quickly becomes unreasonable.

Just think what you would have to do in order to base the thoughts on data:

I would have to request data from every municipality in the country regarding different factors that the immigration could have an effect on. Then I would probably take that data and compile it with other data that is basically impossible to get hold of and then have to compare it with the same data from the 90s. That is of course if every municipality even answers your request (they do not always do that, even if they must) and if they actually keep the records of the data. As with any topic that involves immigration in Sweden, statistics are simply not very often even recorded or stored.

Even if you had this specific information, it wouldn't answer your question. It would mostly serve to re-enforce the beliefs you came in with, because you also need to look for other factors which might explain the housing increases.

For example, in another part of this thread I quoted a news article as saying "Prices have also been pushed up since a law change in 2013, allowing private individuals to charge tenants based on their mortgage costs rather than comparable rent prices in the neighbourhood." How much of an effect has this had in the rents in 2014-2016?

You appear to be young person, so you personally are likely in the same housing market at the refugees. This can make it seem particularly dire for you as most of the new housing being built is for a more expensive part of the market.

So, why is the new housing built for a more expensive part of the market?

Another factor which is harder to plan for and which affects the housing market is internal migration. Just like in the US, smaller towns and cities in Sweden are depopulating as people move to the bigger ones, where there is a stronger economy.

Was that planned for, and how much of effect has that had on housing prices in the big cities?

Furthermore, as https://www.thelocal.se/20170205/swedens-urban-rural-divide-... points out, "It is primarily young people leaving". This is again the population which is in the same housing market as most of the refugees.

Finally, here's a quote from an article from 2009 titled "Sweden risks facing severe labour shortages" / "Over the next ten years, the number of native-born Swedes of working age will decline by 100,000. Without more immigrants, we will be unable to sustain our welfare standards, writes Olle Wästberg, head of the Swedish Institute." https://www.thelocal.se/20091222/24004

> Almost all Swedish regions have set population targets that emphasise growth. The Greater Gothenburg area wants to have a population of 1.5 million in just ten years’ time. Stockholm wants to have 600,000 more inhabitants over the next 20 years.

Was enough housing built to meet the desired growth goals?

But there is data of how many refugees entered Sweden in the 90s, it was roughly a hundred thousand a year then just like in the recent years. Did you read any of the links SiemperVernes linked to? You also say that you don't believe refugees could cut the line to public housing, did you check at all to find out if that was the case? Did you also cross check with SCB to find out how many new houses were built, since that statistics stretches well past the Million program more than 50 years ago? It even stretches back before WWII.

https://www.scb.se/hitta-statistik/statistik-efter-amne/boen...

Or is your personal belief based on your gut feeling?

And, when you say that "they correlate well", what time period are you then looking at? And what data? Because immigration decreased in the mid 2000s while the housing prices increased. No offense, but it looks like your analytical method is "there's lots of newspaper articles about refugees these days, and lots of newspaper articles about rising housing prices, one of them must the main cause of the other". I might as well say "there's lots of articles about smartphones lately while the housing prices are increasing, maybe smartphones lets us live alone more effectively meaning that we take up more space when everyone gets their own apartment instead of a room mate".

It has not been that much of a price change and while it will of course affect some it has not been the driver. It is not THAT difficult to get an apartment in the shitty areas where immigrants want to live but those who buy apartments won't buy in those areas anyway.

"which is my personal belief that is the leading cause to the biggest increases in prices"

The Sweden housing crises was decades in the making. https://www.thelocal.se/20170828/the-story-of-swedens-housin... .

Already the prices were high and housing scarce in 2010. https://www.thelocal.se/20100928/29292 , dateline 28 September 2010, quoting the local paper "Housing crisis worse than ever!"

http://www.bbc.com/capital/story/20160517-this-is-one-city-w... from 2016 points out "But amid strict building regulations and a lack of investment over a number of decades, successive governments have failed to build enough homes for its long-term residents, let alone the latest arrivals. ... Prices have also been pushed up since a law change in 2013, allowing private individuals to charge tenants based on their mortgage costs rather than comparable rent prices in the neighbourhood."

That 2013 change is just before your 2014-2016 time frame. Perhaps it had a bigger effect on the market than you think?

Yes, Sweden accepted a lot of refugees in the last few years. But as the first link points out, they cannot "afford the kind of houses that were being built in the years following the crunch." It seems more that they are priced out of the market more than causing the market prices to rise. (There are certainly secondary effects.)

I tried to find something in the Swedish press. I think this is relevant: http://www.gp.se/nyheter/g%C3%B6teborg/s%C3%A5-l%C3%A4nge-m%... from 2014, so before the timeframe you describe. If I read it correctly (thanks Google Translate), in Gothenburg there were 20,000 fewer homes, relative to the size of the population, than there was in the 1970s. There were 210,000 people registered in the housing queue, and the time an applicant needed to queue was 950 days.

One of the people being interviewed also argues that "there is big gap between what is being built and what those who need a home can afford to pay. A survey conducted recently by Sifo on behalf of the Tenant Association shows that 70 percent of them are considered to be able to pay a maximum of SEK 5,000 for a one. A newly built one in Kvillestaden costs over 6 500 kronor."

This seems to confirm the arguments presented in the English language press, that is, there are large-scale systemic factors that lead to the current housing crisis, and it cannot easily be explained by the large number of refugees.