(Repeats story published on July 3 with no change to text)
By Johan Sennero
STOCKHOLM, July 4 It is one of Swedish
centre-left Prime Minister Stefan Lofven's signature policies -
building 700,000 homes in a decade to ease a shortage of
dwellings that has business worried about attracting employees
and policy makers fearing a property bubble.
But Lofven's plans may be pie in the sky, industry officials
and analysts say.
Decades of weak construction levels combined with a fast
growing population has made new homes scarce. Over 80 percent of
Sweden's municipalities are suffering shortages, a 30 percent
increase since last year, the National Board of Housing said.
The shortage could be the Achilles heel of one of Europe's
fastest growing economies. It has contributed to house prices
clocking up double digit annual growth, sparked fears of losing
international business competitiveness and complicated central
bank policy in an era of record low rates.
For Lofven's minority government, which faces an election in
2018, a failure to seriously dent the shortage may become a
political handicap, given that housing construction was one of
his main campaign promises.
But strict regulations combined with lack of capacity in the
construction sector mean Lofven's plans will likely fall short,
according to industry officials and analysts, while political
deadlock may mean reforms to encourage building will be on hold.
"Either they don't understand how the construction market
works or they don't believe in their own target," said Lennart
Weiss, commercial director at construction company Veidekke,
adding the shortfall may be as much as 350,000 homes.
The shortage has already seen the founders of music
streaming service Spotify - which employs around 1,000 people in
Stockholm - send an open letter to politicians in April, telling
them to solve the issue or risk losing thousands of jobs.
Stockholm house prices soared 12 percent in the last year
and there is a waiting time of around 10 years for rental homes.
"Lofven can decide how many new homes he wants, but he can't
do anything about it," said Han-Suck Song, assistant professor
at Royal Institute of Technology in Stockholm. He said 300,000
homes would be a more realistic target.
Song said strict regulations, including a constitutional law
that allows municipalities to veto building plans, tie the
Sweden invested heavily in housing during the 1960s and
1970s, creating 1.7 million new homes. But in the early 1990s,
building stalled. From 2010 to 2015 158,549 new homes were
created while the population rose by 435,447 people.
In January, the government sat down with the centre-right
opposition, hoping to reach an agreement on how to increase
building. But the centre-left - wanting more state funded rental
accommodation - clashed with the centre-right, which wants more
deregulatory measures to encourage private construction.
"The problem with the Swedish housing market is that there
are no houses and there is no market," said Emil Kallstrom, a
spokesman for the opposition Center Party after the centre-right
pulled out of the talks last week.
Housing Minister Peter Eriksson accused the opposition of
lacking the political will to deal with housing.
"You can lead a donkey to water, but you can't force it to
drink," he said. Eriksson said the government will present
propositions to parliament to speed up house building and that
its target was in reach.
But a lasting political solution is unlikely given an
election in two years, making politicians reluctant to take
unpopular decisions, such as building on green areas. Even with
political will, the target would be hard to achieve.
In June, Daniel Astenius, head of construction at a builder
Serneke, got a call from a client asking him to accept a project
worth almost 300 million Swedish crowns ($35.2 million). Other
companies had already turned him down due to lack of capacity.
"Property developers can't find builders for their projects,
there are no resources," Astenius said, who eventually accepted
Figures from the National Institute of Economic Research
showed that over 40 percent of construction companies said
expansion was being held back, mainly due to lack of labour.
That was a sharp rise from around 5 percent two years ago.
This year the Swedish construction sector is expected to
employ 320,000 people of a total population of 9.9 million.
However the Swedish Construction Federation, says many more are
needed to even come close to the government's target.
"We would need another 40,000 people," federation CEO Ola
($1 = 8.5254 Swedish crowns)
(Editing by Alistair Scrutton and Dominic Evans)