Building a house in Sweden: 75 percent of the cost is taxes and fees

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Published 12 February 2024 at 14.13

Economics. To “build cheaply” is not possible in Sweden because the costs do not depend on the choice of materials and how expensive the property is built – but on bureaucratic costs and taxes levied by the state and the municipality. This is stated by real estate billionaire Roger Akelius in an interview with DI.

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The criticism is well-known: In order to maintain high housing prices, the politicians have every year messed with the construction of single-family houses so much that you basically don't make anything from building your own house today. It is cheaper to buy a ready-made one.

Now Roger Akelius, real estate billionaire and well-known investor, gives some advice in an interview with Dagens Industri. One of the pieces of advice is to assume that the construction companies cannot build anything new in the next five years, because it is simply too expensive.

– You should know that when you build properties, it is 75 percent of the cost consisting of taxes and fees. So it is not possible to “build cheap”. There is very little you can influence.

According to Akelius, the talk about single mothers being able to live in newly built houses is just political talk, and nothing to do with reality.

Furthermore, it is not particularly strange that the construction companies that still build – for example the bankrupt Oscar Properties – in principle deals exclusively with luxury residences. When you still put 75 percent of the cost on bureaucracy, it is stupid to save on the remaining 25 percent, because the building will be much uglier but not very much cheaper, according to Akelius.

– It is not possible to build cheaper, only uglier. Sure, you can put linoleum carpet instead of oak parquet in the living room, but what good does that do? In this context, the parquet costs nothing, and people also want to live beautifully, he says.

Despite the criticism, however, it is clear that all the hassle and all the building regulations work. According to SEB's housing price indicator, the largest group of Swedes now once again believe in rising housing prices, despite the key interest rate being four percent. This suggests that supply – despite being at a record high – is still low enough to bring about rising house prices.