Insight: Building is expensive - that’s why we need to focus on quality

Published 2019-07-15

Hello Housing Crisis!

Where are all newly built three-bedroom apartments that a single parent of two could actually afford? And when will those well planned, cost-efficient student residences that everyone has been asking about for nearly twenty years be ready? And really, why aren't we planning for more flexible housing solutions that can more easily be adapted to the unknown, ever-changing needs of the future?

There is a difference of opinion regarding how to solve the housing crisis, but at Semrén & Månsson, we are convinced that we need more actors to join forces in order to build smarter.

First of all, we need to make producing cheaper. All new developers are trying to, but with varying methods and success. Once the calculation is finalized, it tends to end up in yet another lifestyle profiled neighbourhood with expensive condominiums. Or rentals which best fit for family constellations that include two well-paid adults, even though the ‘average’ family barely exists today. Clearly, this is a flawed system that needs to change - but what do we do?

Accelerating Costs in Sweden
According to Boverket, Sweden needs to build 67,000 new apartments a year for the foreseeable future in order to meet the housing needs of the growing population. At the same time, most of the new-built housing is too expensive for people to afford to live there.

Some are suggesting that Sweden, as a high-cost country, automatically requires housing to be expensive. But, the price increase between 1998 and 2017 is so dramatic that there has to be another explanation. An apartment in an ‘ordinary multi-housing building’ had a production cost of about 1.1 million SEK 1998, according to SCB. In 2017, this number had increased to 2.8 million SEK. This means more than duplicating the cost under a twenty-year span, which significantly exceeds inflation and indexation.

We can no longer continue to build at any price. And we can’t be charging just any rents. If we together were able to find a slimmer way to the product, with more efficient design- and production times and with fewer intermediaries, we would be able to offer people lower living costs - under the pretence that the exceeding efficiency doesn’t only increase the profit margins in the projects.

Reduced construction costs and a greater social responsibility
The government, municipality, and property and construction industries must unanimously demonstrate how serious they are with social construction and social responsibility, in order to overcome the issue that not enough people can afford new productions on the housing market. At the same time, we need to make sure that what we build is beautiful, functional and long-term sustainable - economically, socially and environmentally.

In order to create quality housing that more people can afford to live in, the willingness of new thinking needs to be installed in everyone. There is a need for a clear joint vision for the society we aspire to have and clear ways to reach these goals and objectives.

 

THIS IS HOW SEMRÉN & MÅNSSON WANTS TO ADDRESS THE HOUSING CRISIS
 

Increased supply of buildable land
It often starts in the municipalities. The lack of buildable land, long processing times, and inertia in work with the zoning plan often increase the initial costs for a project. To be able to decrease a project's overall costs, there has to be land to build on. If the supply of land does not increase, the price trend will continue to be too high in many municipalities.

An even more efficient planning process
The time from project idea to construction start needs to be shortened. At this point, a lot of significant initiatives are already in action. The implementation of developer-driven plans is an example that already today contributes to increased efficiency in many areas. But, more effort is needed; for instance, land- and environmental courts (MMD) needs to manage contested zoning-plans much faster than the current rate.

Closer collaboration
To address the housing crisis, the collaboration between the developer, architect, constructor, and the technical consultant needs to be closer. The dialogue and the knowledge exchange within the projects have to be intensified in order to continuously move towards the goal - creating sustainable and attractive surroundings that are functional. It is vital to take time to formulate and stick to a clear vision (read article).

Investments that create long-term value
The design and planning of housing are significant contributors to creating long term sustainability. It is vital to create conditions that maintain low operating costs by adopting a long term perspective regarding the choice of materials, technology, and area-planning. With well-thought and smart investments in the construction phase, higher value is created over time for the property itself and for the residents. Costly today, affordable tomorrow, is an old and wise builder saying that, unfortunately, has become rare in the short term and cost-optimisation focused housing market of today.

Industrialised production
An important factor in more efficient housing production is to utilise modern technology to its full capacity. Today, there is an abundance of opportunities for industrial work with individually prefabricated elements in wood, steel, and concrete with high adaptation to the project’s conditions. The production process becomes digitalised and standardised, while still providing the opportunity for great variation in the architecture.

Reasonable margins
If we are serious about wanting to build high-quality housing at reasonable prices, it requires developers to accept unchanged or even decreased margins. If politicians can’t see the industry pushing to attack the housing crisis, a broad reform of the housing market is to be expected; one where the framework for property development will be made even more narrow with enhanced regulation regarding building, utilisation of land, and rent-setting. Should we end up in this situation, there is imminent risk for history to repeat itself; short term solutions and a 2020s version of the “one million roofs” project at the loss of the innovative and long-term perspective regarding architecture and city developing.

WOULD YOU LIKE TO KNOW MORE?
CONTACT MAGNUS MÅNSSON AT MAGNUS.MANSSON@SEMREN-MANSSON.SE OR +46 31-743 02 00.