Over 1,000 preschoolsmay need to be closedby 2027 due to declining birth rates, recently reported Annika Wallenskog, chief economist at Sweden's Municipalities and Regions (SKR). This is just one example of demographic changes that require a radical reassessment of Swedish housing policy.
Sweden faces a demographic challenge that few seem to take seriously. Fewer children are being born while we are living longer and longer.
In Sweden, fertility has declined from 1.9 children on average per fertile woman in 2010 to 1.45 children in 2023. This is the lowest recorded figuresince measurements began in 1749.The proportion of Swedes over 80 years old is simultaneously expected to increase by nearly 35 percent by 2034, by 50 percent by 2044 and by a full 75 percent by 2054.
Despite thismany municipalities continue to plan for youth housing and preschools as if nothing had happened.The National Board of Housing, Building and Planning's latest housing market surveyshows that the situation has changed drastically in just four years - from a shortage of student housing in 2020 to a surplus in 37 percent of university municipalities. This is a doubling from the previous year.
Already, 21 out of 72 university municipalities report that many student apartments stand vacant year-round. Yet an additional 2,600 student apartments are planned for 2024 and 2025. This risks creating new challenges in the future when these properties, just as in the case of the preschools, stand empty.
The same survey shows that there is a shortage of senior housing in almost half of the country's municipalities. Despite this, almost 400 fewer than the 1,460 homes for the elderly expected for the period 2023-2024 are being planned. We are building for yesterday's needs, while tomorrow's reality is at the door.
Therefore we need tofocus on getting the housing chains moving. Here, senior housing and security housing play a crucial role. By creating attractive housing alternatives for the elderly, we can free up houses and larger apartments for families with children, which in turn opens up smaller apartments for young adults and students.
When a pensioner moves from the house to a modern senior residence, the house becomes available for a family with children. The family then leaves their apartment, which becomes a perfect first home for a young couple. The young couple leaves their respective smaller apartments, which make room for new youth and students. In this way, positive mobility is created in the housing market, without us building for future vacancies.
Building more senior housing is one half of the equation. The other half is that people should want to move there. Here we face several challenges that together lead to a lock-in effect on the market. It is too expensive to live in new senior housing, moving entails high tax costs and many simply want to remain in their current houses and apartments where they are comfortable:
Admittedlynew construction involves initial expenses, but the long-term socio-economic cost of housing that risks standing empty is considerably higher. We must therefore, first and foremost, create more affordable housing alternatives. This includes both attractive housing cooperatives adapted for seniors, which creates an opportunity for the elderly to remain in the property market, and affordable rental alternatives for the three out of ten seniors who do not own their housing.
The 22 percent capital gains tax reinforces the lock-in effect on the housing market. Moving becomes an expensive affair, which deters many from changing homes. To facilitate the move, we should introduce a system with progressive tax reliefs from retirement age. The older the person is, the greater the tax relief when selling their current home and moving to a senior residence. This would address the financial threshold that many experience, especially since seven out of ten seniors own their home today.
Many seniors want to remain in their current homes where they feel secure and have their established routines. One of the reasons for this is the fear of ending up in what is often perceived as an undignified existence in traditional elderly care homes. Today's seniors are healthier, live longer and have higher demands on their standard of living than previous generations. At the same time, loneliness among the elderly is a well-known societal problem that brings consequences for both physical and mental health.
Increasingly more seniorsare seeking modern apartments in central locations with good architecture and opportunities for social interaction - a home one looks forward to moving to. But such alternatives exist to a far too limited extent.
To meet these challenges, we should develop flexible and adaptable housing that both satisfies seniors' wishes and needs. These should be located near the city center with good communications to increase mobility and the possibility of visits. Creating such housing is not only a matter of getting the housing chains moving, but also an important public health measure that can improve the quality of life for many seniors.
It is not just about solving the housing question for the elderly, but about stimulating the entire housing market and fundamentally changing our approach to housing construction. We must think in terms of multifunctional property solutions - homes that can easily be adapted for different needs over time and between generations.
This would not onlycreate homes that work equally well for a senior today as for a family tomorrow, but also sets in motion the housing chains that are so important for a well-functioning housing market. We should not have to demolish houses when demographics change next time.
Decision-makers at all levels must realize the seriousness of the situation. We need a comprehensive approach to housing policy that takes into account the demographic changes. SKR, the National Board of Housing, Building and Planning, the municipalities and housing policy must cooperate to create a long-term strategy that meets the demographic change we are facing.
Let us meet this challenge with forward-looking solutions that create opportunities for all generations. Get the housing chains moving, now!
Michael Guldstrand, entrepreneur and business owner in financial services, IT and public properties
