To build or not to build, is this the problem?

Quite much has been said recently about the shortage in housing supply specifically in larger cities of Sweden. Hans Lind, professor of Real Estate at KTH alleges that the four major construction corporations deliberately strangle supply of housing. Researcher in housing, Rune Wigren, also thinks that those four giant construction firms in the country are not competitive enough with each other. The prices of building materials have increased more than the salary of construction workers. This should have not been the case had production of buildings experienced a corresponding growth.

During the last decade, the average number of residential units per thousand inhabitants constructed in Sweden has been approximately half of that in other Nordic countries. The National Housing Credit Commitee (BKN) has evaluated that 35000-40000 new appartments should be built in Sweden every year. This used to be realized before the financial crisis in 2008. The amount was then reduced to 15000 houses per year during 2009 and 2010. The figure for the year 2012 is estimated to be 2500.

The amount of investments in residential buildings is naturally influenced by both house prices and production costs. It is however an almost established principle an increase in house prices yields in an increase in construction rate. Bengt Hansson, analyst at BKN believes that such high prices as those of today is thus a very suitable situation for construction. The International Collaboration Organization (OECD) asserts however that this is the high prices of building material has slowed down the construction pace. 

Jonas Granström, head of housing development of the Swedish headquarter of Skanska (the biggest construction corporation in Sweden) blames the economic situation for decrease in housing construction despite huge demand in the market. Granström recognises that the prices for houses have had no change for a long time. He believes that this is a result of well-thought initial prices.

Source: http://www.dn.se/ekonomi/de-vill-inte-bygga-bostader