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Is the heat starting to come out of the Danish housing market?

Is the heat starting to come out of the Danish housing market?
The supply of apartments in Denmark has increased for five months in a row. Photo: Jacob Ljørring/APPR/Ritzau Scanpix
The number of apartments and holiday homes on sale in Denmark has increased for the fifth month in a row, and the number of houses for two months in a row. Does this mean that the supply constraints that have been pushing up house prices in recent years may be starting to ease?

According to the latest data from the Danish property website Boligsiden, there are currently 6,107 apartments, 25,085 houses, and 5,409 holiday homes for sale in Denmark, an increase of 2.1, 0.3, and 0.6 percent respectively on last month.

Jeppe Juul Borre, chief economist at Arbejdernes Landsbank, told the Ritzau news agency that he expected the growing supply to eventually start to drag down on the rising house prices recently seen in Denmark.

“Buyers will have slightly better cards in their hands when they go out and chase their next dream home,” he said.

“The fact that we are finally seeing supply edge up a bit is going to take some of the air out of a pressured housing market, which is why I expect price increases to be smaller than we have seen over the past year.”

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Birgit Daetz, communications director at Boligsiden, said in a press release that the rate of sales had started to decrease, while sellers continued to come to the market in similar numbers. 

“Fewer homes are being sold now than there were earlier in the year, but sellers are still coming to the market on a large scale,” she said. 

“This means that for buyers the options are becoming more numerous, after a long period in which supply has been falling and where it has largely been a seller’s market.”

There are still, however, significantly fewer homes for sale in Denmark than in August last year, with the number of houses on the market down 16.5 percent, the number of apartments down 12.5 percent, and the number of holiday homes down 22.6 percent.

This means buyers still have relatively low leverage when it comes to negotiating down prices.

“It is a logical consequence of the low supply that the homes are sold quickly and that the buyers have to pay the price offered to a greater extent,” Daetz said.

“That will change if supply continues to rise. But so far, the movement in the supply is relatively small, and therefore it has not had a great effect on individual house sales, at least not yet.”

Borre agreed that the increase in supply had so far been relatively subdued.

“It is important to say that supply has not skyrocketed. From a historical perspective, there are still few homes for sale,” he said.


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