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PROPERTY

What has happened to Denmark’s housing market so far in 2024?

A drop in the price of apartments in Copenhagen and stable house price trends were among the features of the Danish property market during the early months of 2024.

Published: 11 April 2024 14:52 CEST
What has happened to Denmark’s housing market so far in 2024?
How have house prices in Denmark fluctuated so far this year? Photo: Ida Marie Odgaard/Ritzau Scanpix

House prices for both detached (villaer) and semi-detached or terraced (rækkehus) housing fell by 0.2 percent in terms of the price per square metre in the first quarter of this year, new data from specialist media Boligsiden show.

Effectively, this means house prices were unchanged in the first part of this year compared to the end of 2023, the property media said in a press release.

Stable house prices makes a substantial – if lower than forecast – drop in the cost of apartments in Copenhagen the key takeaway from property market data from the first quarter of this year.

Privately-owned apartments in the Greater Copenhagen were 2.3 percent cheaper in the first three months of this year compared to the preceding quarter.

“In the past, we have seen a price increase from the fourth quarter of the year gone by to the first quarter of the new year. That is explained by the housing market often taking a break during the winter months and activity then increasing when spring arrives,” Boligsiden’s economist and head of communications Birgit Daetz said in the press release.

“But that trend does not apply in the same way this year,” she noted.

READ ALSO: Denmark has highest number of houses put on market since 2008

It is in particular the introduction of a new property tax on January 1st 2024 that has disrupted trends usually seen on the market, she said.

“The new property tax rules took effect at the new year and that change has given some skews on the housing market, especially in areas of the country where property taxes have now increased,” she explained.

A high activity at the end of 2023 in affected areas – notably Copenhagen’s apartment market – was followed by a quiet spell after the new rules kicked in for this reason, she said.

Because of the nature of the new rules, apartments in cities are most likely to see higher property taxes for new owner from 2024 onwards, whereas other types and locations are less likely to be affected.

READ ALSO: EXPLAINED: Denmark’s new property tax rules from 2024

“Having said that, the property tax changes have also given either lower or unchanged taxes in large parts of the country and in several of those places the house prices have gone up from the fourth quarter last year to the first quarter this year,” she said.

Breaking the trends up by region, Greater Copenhagen and Central Jutland – including second city Aarhus – saw house prices fall by 0.6 percent and 1.6 percent respectively.

In North Jutland, Zealand and South Denmark, there were increases of 4.8 percent, 2 percent and 0.6 percent respectively.

Although the price of apartments in Copenhagen fell by 1.7 percent compared to a 1.4 percent national average, the figure is less severe than some had feared, according to an analyst who spoke to news wire Ritzau.

That is despite the decline meaning an 80-square-metre apartment in the capital is now theoretically worth 72,000 kroner less than it was at the end of last year.

READ ALSO: What prospective homebuyers in Denmark can expect in 2024

“There hasn’t been a [price] bloodbath, and that is connected to high employment, inflation falling away and the fact that many Danes are seeing the highest wage increases for decades,” said Mire Lie Nielsen, economist with credit union Nykredit.

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ECONOMY

Explained: Why Denmark’s economy is looking in such extremely good shape

Denmark's economy is growing faster than the government expected, inflation is falling faster, and employment is holding up better. We explain why the new economic forecast shows Denmark has achieved the softest of soft landings.

Published: 16 May 2024 15:41 CEST
Explained: Why Denmark's economy is looking in such extremely good shape

 “When I stood here a year ago and presented my first financial statement, it was with a message that the Danish economy was heading for a soft landing. We have since been strengthened in that assessment,” Stephanie Lose, Denmark’s economy minister, said at a press conference announcing the government’s Økonomisk Redegørelse, or financial statement, for May. 

In the press statement, she said, “optimism is returning to the Danish economy”, with the economy likely to improve further in the coming year.

“We have carried out reforms that make Denmark richer and help to secure the necessary workforce for Danish companies,” she said. 

How has the government changed its growth forecasts? 

The government has increased its expectation for Denmark’s growth rate since its last statement in December, with it now expecting 2.7 percent growth in 2024, up from the1.4 percent it expected for the year in December. 

It has also upgraded its expectations for 2025, predicting growth of 1.8 percent compared to the 1 percent it expected back in December. 

Lose said that the pharmaceutical company Novo Nordisk, which is expanding rapidly as a result of the success of its weight-loss drugs Ozempic and Wegovy, had driven much of Denmark’s recent growth, with the reopening of Denmark’s gas field, the Tyra field, would start to contribute to growth soon.

“In the past two years, the pharmaceutical industry in particular has driven growth in the Danish economy, while there has been stagnation or decline in large parts of the rest of the economy,” she said. “In the coming years, other industries again look set to contribute to growth. Added to this is the reopening of the Tyra field in the North Sea, which also contributes to growth in GDP.” 

What does the government expect to happen to inflation? 

Denmark’s inflation rate fell rapidly from a peak of over 10 percent in October 2022 to below 2 percent in September 2023, where it has stayed ever since. But Lose said she expected the rate to edge up over the coming years. 

“Inflation has fallen quickly and faster than expected,” Lose said. “In the new forecast, we expect inflation to rise in the coming months, as the prices of services and energy pull in the direction of slightly higher inflation.” 

What does the government expect to happen to employment? 

Thanks mainly to Novo Nordisk increasing staffing to manage the success of its new drugs, and the bounce back from the pandemic, employment has also held up better than expected.

Employment soared by some 160,000 people between 2021 and 2023, and the government now expects the number of employed people to grow by a further 13,000 in 2024 but to then fall by 18,000 in 2025. 

“Employment has long been at a sky-high level, so it is estimated that we will see some adjustment. But we do not expect an extensive setback, because the Danish economy stands on a rock-solid foundation,” Lose said.

What does the government expect to happen to housing prices? 

The government has significantly upgraded its expectations of what will happen to the price of domestic property this year. It now expects prices to increase by an average of 3.2 percent in 2024 and 3 percent in 2025, a rise of two percentage points on the 1.2 percent rise for 2024 it expected when it made its last forecast in December. 

This is due to the continued strong labour market, which has seen rising incomes and wage increases in Denmark as a result of new collective agreements, at the same time as Denmarks Nationalbank is expected to cut interest rates. 

This rise follows two consecutive years of falling real house prices in 2022 and 2023. 

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