Sweden Prime Minister Stefan Lofven loses confidence vote amid housing crisis

Sweden's Prime Minister Stefan Lofven before a confidence vote in the Swedish Parliament in Stockholm. Photo / AP

Stefan Lofven, Sweden's Social Democratic Prime Minister since 2014, lost a confidence vote in Parliament today amid a housing crisis and skyrocketing real estate prices, making him the first Swedish government leader ever to lose such a motion.

The vote was initiated by the small Left Party, an ally of the minority Government that is not in the two-party centre-left coalition but had provided the votes to pass legislation.

At the centre of a controversy that sparked the Left Party to lose confidence and vote against Lofven are plans to deregulate Sweden's housing market because of accelerating price increases that took place during the pandemic.

Sweden has strict regulations on rents aimed at maintaining affordable prices in larger cities. However, this disincentivises property developers from building new homes for the rental market. People needing to rent a home can find themselves waiting for years for a contract, and buying property is increasingly hard amid soaring home prices.

However, the Left Party fears deregulating the rental market will lead to rapid price increases and deeper segregation between rich and poor.

It is unclear what will happen next in Sweden. Lofven said last week he would wait for the vote and then "think through what is best for Sweden".

The Prime Minister has one week to decide whether to call an early election.

Over the weekend, Lofven held last-minute meetings seeking to secure a majority in Parliament for his proposed rent reforms. On Sunday, he sought to soften the reforms by inviting landlords and tenant organisations for talks.

But the leader of the Left Party, Nooshi Dadgostar, stood by its decision to oppose Lofven and said his effort was "a political show".

"We have done something that is perceived as unusual in politics ... kept our word," she said.