New construction can revitalise disadvantaged housing areas

Is it possible to eradicate segregation through construction? The answer is yes. Poor “problem areas” can be revitalised by building new tenant-owned housing. This is the finding of research conducted by Urban Lab at Uppsala University, based on population data from across Sweden.

“We’ve built up quite a large environment in a short time, and are seeing a lot of interest in what we do. This is probably linked to the fact that there is currently a great deal of interest in segregation issues, neighbourhood development, integration of immigrants, migration within the country, and depopulation of rural areas,” says Matz Dahlberg, Professor of Economics at The Institute for Housing and Urban Research (IBF).

Visited Linköping

Last spring, for example, colleague Che-Yuan Liang visited Linköping and presented his research to construction companies and politicians. Even though research shows that there is much to be gained from building tenant-owned housing in poor neighbourhoods, construction companies worry about the risk that such housing will be difficult to sell.

Researchers may feel uncomfortable about making policy recommendations, but Matz Dahlberg and his colleagues truly believe in the results.

“We estimate average effects and, naturally, cannot guarantee that it will work specifically in Linköping. But in this particular case, our studies are designed well, so we also have to be prepared to take our data seriously.”

Lists of disadvantaged areas

For a long time now, Sweden has published lists of particularly poor neighbourhoods. For example, politician Leif Göran “Blomman” Blomberg implemented special initiatives in disadvantaged housing areas in the 1990s. Today, it is the police who compile lists of disadvantaged areas, an act which has come under fire because it can stigmatise the individuals who live in those areas.

“What’s interesting is that it is basically the same areas that have been singled out over and over through the years – from Blomman’s initiatives to the police lists.”

So, why is it so difficult to tackle the problems in these areas? This can be explained by the “happiness paradox”, a term coined by researchers according to Matz Dahlberg.

“If you lift people up, so they can find jobs and earn higher incomes, they often leave the area. In this way, the individual’s happiness becomes something that perpetuates the area’s unhappiness.

Structural changes in the area

Previous policy often focused on individuals, with labour market initiatives and similar measures. But after receiving backlash against the lists of disadvantaged areas, many municipalities are instead considering making structural changes in the area, such as new construction.

“We see that when you build a certain type of housing, such as tenant-owned housing in apartment blocks, it gives the area a boost. We’re talking about large properties with at least a hundred residents. Wealthy individuals move into the new property, as a newly constructed property is rather expensive. But more wealthy individuals also move into the existing housing in these areas, compared to the control group. So, something happened to the area. It has become so popular that even wealthier people want to move there, to all types of housing,” says Matz Dahlberg.

The researchers base their research on large volumes of anonymised data focusing on factors such as housing, education and income. They have studied figures from the 25 percent poorest neighbourhoods in Sweden over a prolonged period, from 1991 to 2022.

“What we see is that people are moving into these new buildings, but positive things are also happening in the older buildings in the area. We see this as gentrification of the area.”

The area gets a boost

Gentrification is usually described as something negative, but that does not have to be the case, argues Matz Dahlberg. Instead, he describes it as the area getting a boost.

“Higher incomes come into the area and things become more pleasant from a variety of perspectives – perhaps less crime, improved public services, better school results, and so on. Some people are justifiably concerned that rent will rise to a price level that will make it unaffordable for some people to continue living there. This is called displacement, and is a negative consequence of gentrification.”

However, the researchers cannot see that the new construction has led to displacement in this study. They have access to data on all individuals throughout Sweden and can see who lived in a building before and after, and follow where they go.

“People are constantly moving in and out of areas. What we are seeing is that new construction does not lead to more people being forced out of poor areas. However, we do see that more wealthy people are moving in. So, the poor people who move out of the area are being replaced by wealthier individuals than would otherwise have been the case.”

More wealthy people are moving in

The rise in income levels is due both to more wealthy people moving into the newly built properties and to more wealthy people living in the older properties. The researchers also note that among those moving into the newly built properties, there is an overrepresentation of people who had already been living in the area.

“This may mitigate the happiness paradox, in that individuals who have earned higher incomes can now pursue a housing career in the area and do not need to move away.”

Today, there are many construction projects underway in disadvantaged areas, including in Gothenburg, where the aim is to eradicate segregation through construction.

“When large apartment blocks are built, this often has knock-on effects. If 100 new residents move into a neighbourhood, this brings with it various services and perhaps a new preschool. Added to this are local amenities, making it more pleasant to live there,” states Matz Dahlberg.

Annica Hulth