Could Denmark’s summer house price slowdown avert government action?

House prices in Denmark have soared upwards during the Covid-19 pandemic, but there are now signs of a slowdown.

Could Denmark's summer house price slowdown avert government action?
Photo: Signe Goldmann/Ritzau Scanpix

A recent slowdown in house prices, which have otherwise sharply increased over the last 18 months, could be enough to prevent government intervention to control the market, according to an expert.

“This certainly relieves concerns that there could be a genuine housing bubble,” Aarhus University economics professor Michael Svarer, a former senior official advisor, told news wire Ritzau.

“There is concern that (house) prices are increasing at such a speed that people are buying for a speculative profit and thereby keeping prices artificially high,” Svarer explained.

“In light of that, the fall in prices reduces the need for regulation,” he added.

The prices of houses and apartments increased by 0.2-0.3 percent between July and August, according to figures from property website Boligsiden.

That is in line with the trend in more recent months, which have seen the market calm following the dramatic effects of the Covid-19 pandemic.

Summer house prices meanwhile fell by 0.2-0.3 percent between July and August, according to the numbers, which take seasonal variation into account.

Summer house prices had not fallen for 16 months prior to the decrease seen in August.

The trends are evidence of changes to spending habits caused by the pandemic, pushing the housing market upwards, Svarer said.

“People have simply prioritised housing higher in their private spending. There are now signs of more inclination to spend money on travel,” he said.

Denmark’s housing market should continue to be monitored to see whether the current trend holds, the economist noted.

But the government would need to make any decision on intervention in the relatively near future.

The government has three months to respond to advisories to tighten regulation issued by its risk assessment council on June 22nd, Svarer said.

But the calm market over the summer gives an “extra argument” to the government should it be reticent to step in, he added.

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

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Greenland foreign minister axed over independence remarks

Greenland's pro-independence foreign minister Pele Broberg was demoted on Monday after saying that only Inuits should vote in a referendum on whether the Arctic territory should break away from Denmark.

Greenland foreign minister axed over independence remarks
Greenland's pro-independence minister Pele Broberg (far R) with Prime Minister Mute Egede (2nd R), Danish foreign minister Jeppe Kofod and US Secretary of State Antony Blinken (2nd R) at a press briefing in Greenland in May 2021. Photo: Ólafur Steinar Rye Gestsson/Ritzau Scanpix

Prime Minister Mute Egede, who favours autonomy but not independence, said the ruling coalition had agreed to a reshuffle after a controversial interview by the minister of the autonomous Arctic territory.

Broberg was named business and trade minister and Egede will take on the foreign affairs portfolio.

The prime minister, who took power in April after a snap election, underscored that “all citizens in Greenland have equal rights” in a swipe at Broberg.

Broberg in an interview to Danish newspaper Berlingske said he wanted to reserve voting in any future referendum on independence to Inuits, who comprise more than 90 percent of Greenland’s 56,000 habitants.

“The idea is not to allow those who colonised the country to decide whether they can remain or not,” he had said.

In the same interview he said he was opposed to the term the “Community of the Kingdom” which officially designates Denmark, the Faroe Islands and Greenland, saying his country had “little to do” with Denmark.

Greenland was a Danish colony until 1953 and became a semi-autonomous territory in 1979.

The Arctic territory is still very dependent on Copenhagen’s subsidies of around 526 million euros ($638 million), accounting for about a third of its budget.

But its geostrategic location and massive mineral reserves have raised international interest in recent years, as evidenced by former US president Donald Trump’s swiftly rebuffed offer to buy it in 2019.

READ ALSO: US no longer wants to buy Greenland, Secretary of State confirms

Though Mute Egede won the election in April by campaigning against a controversial uranium mining project, Greenland plans to expand its economy by developing its fishing, mining and tourism sectors, as well as agriculture in the southern part of the island which is ice-free year-round.

READ ALSO: Danish, Swiss researchers discover world’s ‘northernmost’ island