Local municipal requirements causing constructions costs to remain high

The Swedish Competition Authority notes that several actors have entered the market for housing construction in the past five years, and several changes to the regulations have been made in order to strengthen competition and hold back the soaring Swedish prices for newly produced houses.

– We have noticed that the number of actors have increased, but we haven’t seen a corresponding improvement to the competition. There is more to be done here, says the Swedish Competition Authority’s Director General Rikard Jermsten.

The Swedish Competition Authority is now proposing that three areas should be studied closely in order to strengthen competition:

• Local requirements from the municipality during constructions, in other words requirements that deviate from the national norm, have the potential of pushing up the costs.
• Municipal construction companies often receive a small amount of bids when they are procuring housing constructions. The Swedish Competition Authority calls for an investigation why this is the case, and how more construction companies can become interested enough to submit a bid.
• There is currently a lack of studies into the competition on the markets for construction materials. This is despite the fact that construction material represents a major part of the total construction cost. The Swedish Competition Authority wants to examine how, among other things, rapid price changes and different new requirements affect the market.

– When municipalities have local requirements during housing constructions it hampers competition and keeps construction costs high.  If we are to achieve healthier competition, which will cause our soaring Swedish construction costs to start to resemble those of other comparable countries, we need measures that make it easier for companies to be active all over the country, says Rikard Jermsten.

Read the report, 2018:7 (in Swedish with a summary in English)