Housing shortage or building mismatch

At SEB’s annual real estate seminar, industry leaders explored how demographics, regulations, and market inefficiencies are reshaping Sweden’s housing landscape. A key takeaway: solving relocation chains and aligning construction with actual demand is crucial for creating sustainable, affordable living environments.

Is there a housing shortage – or are we just building in the wrong places at the wrong price? That was one of the key themes at SEB’s annual real estate seminar, “The Impact of Demographics on the Real Estate Market”. The event brought together industry leaders to explore how demographic shifts, regulatory frameworks, and market inefficiencies are shaping the future of Swedish housing and public properties.

“At our annual real estate seminars, we aim to focus on issues and trends that are not only important for the industry but also for society at large. This year’s themes—demographics and AI—are great examples of that,” said Mikael Franzén, Head of Real Estate Sweden and host of the seminar.

The panel discussion revealed a complex picture: stalled relocation chains, older people staying in their homes, new construction that doesn’t match demand, and regulations that make building both expensive and inefficient.

Nils Styf, CEO of Hemsö, described a market where global uncertainty slows both investment and development:

“Uncertainty around interest rates affects the willingness of property owners, investors, and tenants to invest. We want predictability.”

He also criticized the regulatory burden, especially in the construction of elderly care facilities and schools:

“We are experts at adding new layers of regulations instead of looking at what we can remove. In a care home, every apartment must have a kitchen. When I ask if they are used, the answer is always no – they are disconnected immediately because of fire risk. Yet we build them. And when construction becomes more expensive, it comes at the expense of something else. It comes at the expense of care and money that could have gone to more nurses.”

Demographics and stalled relocation chains

Anna Granath Hansson from Nordregio emphasized how demographic trends and political decisions interact in the housing market:

“Many assume that older people will leave their homes to younger generations, but that doesn’t happen as many elderly wish to stay in their homes as long as possible and municipalities pursue aging in place strategies as elderly-care facilities are lacking in many locations and are also more costly than home-based care. Relocation chains only start when people pass away. This makes the dynamics hard to analyze and very local, which strongly contributes to uncertainty.”

She also noted that municipal demands on new construction often do not take financial implications into consideration:

“Municipalities don’t always consider what the requirements mean in terms of money. Decisions are driven by a great wish to create well-functioning residential areas over time, but the question of how they influence for example the possibilities to create affordable housing rarely comes up.”

Anders Lilja, CFO of Rikshem, argued that the issue is not purely a lack of housing, but a mismatch between what is built and what is needed:

“Many municipalities still report a lack of housing. The actual demand, however, is inclined towards low cost housing which is found in the older stock. Hence, expensive new construction is not the solution everywhere. We must become better at utilizing the existing stock of housing and promote movement between different types of housing in different periods of our lives. Taxation and regulations are currently prohibitive of this.”

He stressed the importance of quality and micro-location:

“With weakening demographics, it is important for housing companies to have attractive neighborhoods where people want to live and where they feel safe. Good quality housing also needs to be combined with good and safe schools and other public use properties. Even with lower population growth there is a need for continuous improvements of pre-schools, schools and elderly care facilities to keep them fit for purpose and attractive both to staff, pupils and tenants.”

A broader societal perspective

Moderator Johan Klerfelt summarized the discussion with a call for a more holistic approach:

“Housing, demographics, and elderly care is nothing new, but what I believe this forum clearly demonstrated, and what the market and politics often overlook, is that issues are strongly interlinked and that the best solutions from a societal and real estate owner perspective involves taking a broader view on living environments. This means considering  everything from student housing and rental apartments to senior living and elderly care. 

There are great opportunities for both real estate owners, tenants, and society in solving the topic of relocation chains. In addition, and given that Sweden faces a significantly lower population growth, micro-locations and operational efficiency will be crucial to creating attractive and affordable living.”

As Anna Granath Hansson concluded:

“Solutions for the elderly should be on the agenda in a completely different way than today. It affects the real estate market – but above all, it is a question of what society we want to have.”