The Residential Sector in Sweden

In the early 1990s, several changes were being made in the subsidy system, which had a greater impact on the construction of new residential buildings than anyone at that time could ever imagine. Building starts dropped from 60,000 dwellings annually, to just over 10,000 in only a couple of years time.

The IT-era boosted for a short period the building of private flats, but when the IT-bubble burst in 2000 this market segment dropped and "luxurious flats" became difficult to sell. Due to continued urbanisation in the period 1990 - 2000, in combination with an extreme low level of building starts, the accumulated need for housing for the lower and middle class has become acute. This has led to a new set of governmental subsidies, presented in August 2003, which focus on housing for lower income groups and young people. Once again, the industry experience that the true medicine for the building of new homes in Sweden is indeed governmental subsidies. Last year the building starts rose by 19%. The increase occurred after August.

If we look at the R&M market for residential buildings, we have over 4,300,000 existing dwellings. Of these, approximately one million were built in the 1960s. These dwellings are in general considered to be of somewhat poor quality, and are to a large extent owned by the public sector. In Sweden, however, as well as in most of Europe, the public sector struggle with bad finances. This has of course a negative impact on the renovation investments for these buildings. This has created an accumulated market potential, but we see no signs for this market potential to be realized as long as the poor finances remain.

For the investments in privately owned buildings (mainly 1+2 dwellings but also flats), the market has experienced a growth ever since the mid 90s. The so called Do-It-Yourself market (DIY) started to grow when foreign chain stores such as Finnish K-Rauta, the Swiss Bauhaus, and the Danish Silvan started their expansion on the Swedish market. Every year, we have seen a continuous increase in these investments, and the Swedes become handier for each year that passes by. Every TV-channel has a DIY-program, where the viewer is instructed as well as inspired. The renovation trend has come to stay, and this has had and will continue to have an impact on the structure of the building materials market. Indeed, it will therefore also have an impact on the strategies for the actors in the construction and building materials industry.

  Building Trends in Sweden, Februar 2004


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