On Wednesday, the government revealed its intention to allocate 140 million kronor to support housing construction in the growing municipalities of northern Sweden. This sum is part of a larger 1.53 billion kronor investment in housing over the next four years.
–The funds are intended to stimulate housing construction in the affected municipalities, stated minister for infrastructure and housing Andreas Carlson in a press release.
The specific distribution of the funds has yet to be determined. Minister for energy and business Ebba Busch (KD) announced during her visit to Skellefteå on Wednesday that the government would provide more details in the future.
However, the question remains: how far will 140 million kronor go? Norran contacted several construction industry players to get an estimate.
The answer is that it's difficult to provide an exact figure, as many factors influence the costs. According to the construction professionals interviewed, the approximate cost to build a residential or rental unit ranges from two to three million kronor.
Without additional financing, 140 million kronor would result in approximately 70 apartments for all of Norrland. Over four years, 1.53 billion kronor would amount to roughly 190 apartments per year, based on the same calculation.
According to a contractor Norran spoke with, the money won't go far. Skellefteå municipality estimates that 1,000 new homes are needed annually. Can 1,000 homes be built with 140 million kronor?
– No, the contractor said.
Ebba Busch suggested that the funds could be considered a component of the overall housing construction financing, particularly when most of the funding is in place, but a final amount is lacking.
– If the government can step in at that point, you can achieve a lot with a relatively small amount, she said.
Norran has previously reported on a pilot project underway at Anderstorg in Skellefteå, where Norrlandsfonden is providing top-up loans for the construction of 108 homes.
As of Wednesday morning, Norrlandsfonden had not received any information about whether the government's 140 million kronor would reach them next year.
– We've told the ministry of housing that we are ready for an assignment, said Susanne Olofsson, project leader at Norrlandsfonden.
In the pilot project, Norrlandsfonden has allocated between 70 and 100 million kronor to support construction projects. This amount represents one-fifth of the required capital.
Based on that model, 140 million kronor could roughly lead to the construction of 350 new homes. If 1.53 billion kronor is used to co-finance one-fifth of the cost of construction projects, it could result in 3,825 new homes in northern Sweden over four years.
According to Ebba Busch, the Norrlandsfonden pilot project has been successful, and she believes the government's proposed funding can go a long way.
– 140 million kronor isn't pocket change; it's quite significant, she said.
Several construction industry players that Norran spoke with are positive about the government's proposal to invest in housing construction. Kurt Nyström, CEO of Contractor said:
– I’d like to see more funding, but this is a step in the right direction.
Meanwhile Skellefteå mayor, Lorents Burman, was also spare with his praise towards the government.
– It is not enough. The overall sum of 1.5 billion kronor may sound like a lot, but a newly produced apartment costs approximately 2 million kronor to build, which will be approximately 750 homes fully financed.
– However, this seems to be a support to get housing construction started, so it will be interesting to see how the money will be used.