Copenhagen housing prices at pre-crisis levels

Copenhagen housing prices at pre-crisis levels
Photo: Colourbox
In parts of the Danish capital, property prices have reached highs unseen since before the financial crisis leading to concerns that a new bubble could burst.
Politiken reported Monday that an analysis of property prices in Copenhagen between 2007 and 2014 shows that prices in parts of the city have topped their pre-crisis levels. 
Property prices per square metre were higher in 2014 than they were in 2007 in Copenhagen’s inner city and the districts of Vesterbro, Østerbro, Islands Brygge and Valby. 
In Vesterbro, 2014 prices were a full 14 percent higher than at the peak of the housing bubble, with average prices going from 28,310 kroner per square metre in 2007 to 32,199 kroner per square metre last year. 
Islands Brygge property prices have increased by nine percent and Østerbro’s by three percent, while average per-square-metre prices in the inner city and Valby are one percent higher than they were in 2007.
The increases have some concerned that a new housing bubble will soon burst. 
“It is clear that the relatively large price increases in Copenhagen lead one’s thoughts back to 2006-2007, but there are many differences between the developments we see in the Copenhagen housing market today and what we saw back then,” Morten Skak, a professor at the University of Southern Denmark who specializes in household economy, told Politiken. 
Skak argued that in the late 2000s, the economy as a whole was booming and Danes were filled with economic confidence, which is far from the situation today as Denmark continues to slowly fight off the effects of the financial crisis
The sharp price increases are also only found in Copenhagen’s most sought-after areas. As one moves further away from the city centre, prices are still lower than they were pre-crisis. According to figures from the Association of Danish Mortgage Banks (Realkreditrådet), the average per-square-metre price in the Greater Copenhagen area is still 15 percent lower today than at the outset of 2007. 
Las Olsen, an economist at Danske Bank, said that it is far too early to talk about a new housing bubble. 
“One needs to realize that Copenhageners since 2006-2007 have seen a big increase in their real wages. With that, the property prices are actually 25-40 percent lower in relation to income,” he told Politiken. 

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