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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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What do we get when the demand is higher than the supply on any goods or services? Inflation. What do we get when the prices are regulated by some administration and the inflation has to be put under control? Black market. What to do to get out of this vicious circle? To deregulate the market and allow buyers and sellers decide what is the real price of the product and service. And if the government, both national and local, wants to put a real cap on the inflation, it can influence the market by pouring more money in the construction of affordable housing.

Sounds simple but this is only a theory. In reality many governments, when they meet a growing demand, opt for prices' and rents' regulation instead of supply increase. Something like that can be observed in capital of Sweden- Stockholm. The situation there can be tactfully described as a shortage of affordable housing for rent coupled with the high level of administrative regulation* and as a result a growing black market.

How this black market functions? As we have said earlier, in Sweden is far more cost-effective to rent rather than buy a residential property. While renting tenants are protected by the administrative regulations. Instead while buying they have to pay high property taxes. In other words, the society has taken from the buyers what it has given to the tenants.

The better deal for the tenants turned to be a bad deal for the communities that subsidized the affordable renting buildings. To meet its financial obligations the city administration in Stockholm decided years ago to privatize some of its residential inventories. As a matter of fact the share of rented residences has fallen from 60% to 50%. This trend forced some of the tenants to begin searching for properties to buy. We'll talk about them a little later.

Some of the poorer tenants that couldn't afford buying had to choose between two options: waiting up to 15 years to get an apartment and pay a modest rent; or trying to find another way to get the same apartment without waiting up to 15 years.

Thus the black market in Stockholm was born. Unofficially (of course there aren't any statistics about that) someone can "buy" an apartment lease for up to 25% of the market evaluation of the property (Le Monde).

What are doing the people who can buy something instead of waiting for years or "buying" their leases? They are going to the open market where the prices are always one step ahead of the average inflation and the incomes' actualizations. The prices in the best areas of the capital city have reached $350/sq.feet, some 50% increase over the last years. The profile of the average buyer in the late 90's was that of a young high-tech or dot.com millionaire. Even after the dot.com balloon burst the demand in Stockholm remained relatively high because of the shrinking renting market due to the privatization. For the ordinary citizens it has become more and more difficult to go on the real estate market looking for a house or an apartment because the average incomes have decreased compared to the levels of the 60's and the 70's.

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* - We mentioned briefly about this phenomenon in a previous article.

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