Brexit boosts Danish housing market
New figures from Statistics Denmark show that home prices increased by nearly two percent in July, the latest month for which numbers are available.
Published: 5 October 2016 11:50 CEST
Housing prices have steadily risen in 2016. Photo: Kasper Palsnov/Scanpix
The national average for single-family houses roses by 1.6 percent while apartment prices increased by 1.4 percent over the month before.
The jump is even greater, at 2.2 and 2.3 percent respectively, when the period of May to July is compared with February to April.
Louise Aggerstøm Hansen, an economist at Danske Bank, said there are two key factors behind the increase.
“The progress on the housing market is driven by a general improvement in the Danish economy and the incredibly low interest rates,” she wrote, according to news agency Ritzau.
“The strong July figures should also be seen in the light of the significant rate drops connected to the British Brexit vote,” Hansen continued.
In the days after the Brexit referendum, interest rates on Danish home loans dropped to a new all-time low, with Nordea Kredit’s ‘kort rente’ loan falling to -0.31 percent.
Prices have already risen in six of the seven months of 2016 for which Statistics Denmark has figures for, and Steen Bocian, an economist with the Confederation of Danish Enterprise (Dansk Erhverv), said they are likely to continue to rise.
“Right now we expect that interest rates will remain low for some time still, which means that we anticipate that housing prices could well continue to rise further,” he told Ritzau.
The Danish central bank warned last month however that the housing market is in danger of overheating, particularly in the capital.
“Price increases in Copenhagen have been so persistent and strong that the development could be consistent with a bubble … just as in the mid-2000s,” Nationalbanken said in a quarterly report.
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