Advertisement

Will house prices in Denmark ever fall?

Ritzau/The Local
Ritzau/The Local - [email protected]
Will house prices in Denmark ever fall?
A Danish bank says inflation and interest could bring down house prices by the end of next year. File photo: Mathias Svold/Ritzau Scanpix

House prices in Denmark have increased consistently in recent years, making it harder for first time buyers to get on the property ladder. But a reversal in the trend can be expected by 2024, a bank said on Wednesday.

Advertisement

Increasing interest and inflation will cause house prices in Denmark to fall by the end of next year, Danish bank Handelsbanken said in a new prognosis published on Wednesday.

The bank predicts an overall fall in property prices of between 10 and 15 percent by the end of 2023, according to the analysis.

“And we would certainly not rule out such marked price drops in the most expensive areas like the apartment market in Copenhagen, which will also be impacted by a property tax reform that takes effect in 2024,” the bank’s senior economist Jes Asmussen wrote in the analysis.

Advertisement

High employment levels will help place the Danish economy in a strong position once it reaches more difficult times, according to the analysis.

The war in Ukraine has contributed to instability which has helped push inflation upwards to levels not seen since the early 1980s.

READ ALSO: Food and energy prices rocket as Danish inflation hits 40-year high

While the consumer price index in April was 6.7 percent higher than last year, Handelsbanken expects inflation for the year as a whole to be around 6.2 percent.

“And although it is expected to fall next year, we will probably have to get used to inflation being higher than we have been used to for many years,” Asmussen wrote.

High inflation and raised interest rates are a bad combination for home buyers who will see their buying potential diminished, the bank concludes.

But predictions of lower property prices in the future are subject to uncertainty because of the war in Ukraine and its potential to cause further inflation.

Asmussen nevertheless said it is not a question of whether house prices will fall, but when and by how much.

“We expect that the many headwinds for the housing market will lead to price drops for the country as a whole, and these will become clearer after the summer,” he said.

More

Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

Anonymous 2022/05/19 15:04
Hi what is the tax reform in 2024? do you have an article on that

See Also