Sweden should phase out rent regulation, introduce a municipal property tax and remove tax subsidies for homeowners to create a better balance on the housing market, according to the OECD.
This could, according to OECD Chief Economist Ántonio Pereira, contribute to more homes for the economically weakest – even in urban areas.
Sweden has done worse than others
The OECD also thinks that the building process and licensing can be accelerated with digital tools, to get a boost in the supply of homes.
High household debt and a large share of floating interest rates among mortgages are described by the OECD as factors that have slowed down the Swedish economy.
The housing market is important to understand why Sweden has done worse than others over a period, says OECD economist Jon Pareliussen at a press conference.
It's factors that play a big role when households tighten their consumption, he adds.
The tax relief that the government has implemented on fuel and renovations does not help low-income earners, notes Pereira.
In its review of the Swedish economy, the OECD also sees a need for school reform and investments in higher education. More resources for labor market policy, investments in adult education and internships are also called for to get the knowledge level up and improve the match on the labor market.
“The quality of higher education seems to have fallen,” writes the OECD in the report.
They describe vocational training programs as “unpopular” at the same time as job seekers with low knowledge levels have difficulty finding jobs, which creates social and political discontent.
“Sweden has taken a step back”
But Sweden also gets praise. Among other things for one of the lowest levels of state debt among OECD countries and a stable fiscal framework. And the Swedish Central Bank acts reasonably as it is now, with a pause for interest rate cuts pending incoming data.
Sweden is also characterized by a high standard of living and a larger share of the population participating in the labor force than in many other OECD countries.
But when it comes to climate policy, OECD economists want to see faster market-based measures, improved governance and for Sweden to strengthen its “long-term commitment” to slow down climate change.
Sweden has taken a step back. It seems unnecessary, says OECD economist Jon Pareliussen.
The OECD's economists expect Swedish growth this year to increase to 1.6 percent, to continue upwards to 2.3 percent in 2026. Last year's growth was a moderate 0.7 percent. The so-called KPIF-inflation – which according to the Swedish Central Bank's goal should be around 2 percent – is expected to rise to 2.8 percent this year and fall back to the target in 2026. Last year it was 1.9 percent. Unemployment is expected to peak at 8.7 percent this year, up from 8.4 percent in 2024. OECD economists believe, however, that it will be dampened to 8.3 percent in 2026. According to the OECD, one can assume that private consumption will be strengthened by higher real wages and better labor market conditions, while unemployment is expected to fall back when demand for labor increases. The risks in the forecast are on the downside – that is, OECD economists see a greater risk of setbacks than positive surprises. The OECD points to the tense situation regarding global trade and the geopolitical development. A weaker global growth can have significant effects on the open Swedish economy. Source: OECD Economic Surveys, Sweden 2025 (Volume 2025/13)
