Housing Prices Slow from Continued Downturn in Denmark

Slower than anticipated economic growth has dragged Denmark’s housing market down along with it. After seeing consecutive quarters of increasing house prices, growth is beginning to slow. See …

Slower than anticipated economic growth has dragged Denmark’s housing market down along with it. After seeing consecutive quarters of increasing house prices, growth is beginning to slow. See the following article from Global Property Guide for more on this.  

Strong house price increases in the first of 2010 were not sustained in the second half as prices froze. Weaker economic growth combined with problems in the banking sector pushed Denmark’s housing market to adopt a wait-and-see attitude.

After increasing by an average of 2.6% q-o-q from Q4 2009 to Q2 2010, the average price of owner-occupied flats in Denmark fell 1.4% q-o-q to Q3 2010. Nevertheless, the average price of DKK18,404 per sq. m. (€2,468 per sq. m.) was still higher 6.6% from a year earlier, according to the Realkreditrådet (Association of Danish Mortgage Banks).

In Copenhagen, the capital and largest city, the average price of owner-occupied flats was DKK23,190 (€3,110) per sq. m. in Q3 2010. Although it was up by 12.3% from a year earlier, it was virtually unchanged (-0.9%) from the previous quarter. In the past three quarters, the prices of flast in Copenhagen rose by an average of 4.25% quarterly.

Try Gemini Today! 123

The Gemini Exchange makes it simple to research crypto market, buy bitcoin and other cryptos plus earn Up to 8.05% APY!

The average price of single-family houses in Denmark was DKK11,989 (€1,608) per sq. m. in Q3 2010. It was up by 3.4% from the same quarter last year but down by 0.4% from the previous quarter.

In Q3 2010, the price of single family homes in Copenhagen was unchanged at DKK24,021 (€3,222) per sq. m. from the previous quarter. It was up by 9.86% from a year earlier. In the past three quarters, the price of homes rose by an average of 3% q-o-q.

Movements in the housing market generally mirror that of the over-all economy.  Denmark’s GDP growth rose from 0.7% q-o-q in Q1 2010 to 1.5% in Q2 before slowing down to 1% in Q3. Official Q4 figures are not yet available but growth is expected to slow further to less than 1%. Overall GDP growth for 2010 is estimated to be around 1.9%.

Problems in the banking system led to the lowest net mortgage lending in 10 years, according to the Realkreditrådet. Net lending, at a downward trend since 2007, fell to DKK 13 billion (€1.74 billion) in 2010. In October last year, blanket guarantees on senior debt and deposits expired.

In February 6, 2011, Amagerbanken became the most recent bank to collapse. It was the eighth largest bank in terms of deposits and lending. The bankruptcy was due to losses from high-risk in the real estate loans, aggravated by the financial crisis and currency speculation.

Since the onset of the global financial crisis in 2008, 11 financial institutions in Denmark have failed and placed under government receivership. Nevertheless, the overall banking and financial system remains stable assures the central bank.

“The Danish financial sector as a whole is assessed to have sufficient capital and liquidity to meet the outlook for the Danish economy” said Nils Bernstein, governor of Danmarks Nationalbank.

This article was republished with permission by Global Property Guide.
 

Share This:

In this article

gemini