Danish apartment sales cool to eight-year low

The red-hot Danish apartment market of 2021 has cooled to pre-pandemic levels, according to new data.

Danish apartment sales cool to eight-year low
File photo of estate agent's window. Apartment sales in Denmark have cooled after the market hit record levels in 2021. Photo: Mathias Løvgreen/Ritzau Scanpix

In the first half of 2022, 8,644 owner-occupied apartments were sold in Denmark, down a third from 2021’s tally of 12,947 flats sold by that time, broadcaster TV2 reports based on  data from real estate company Boligsiden. 

The figure is also slightly down on the number of apartments sold during the first halves of 2019 and 2020. The last year which saw fewer apartments sold during its first six months was 2014.

“Many used the coronavirus pandemic to move house because they had time and opportunity and maybe felt that they were too cramped where they lived,” Mira Lie Nielsen, housing economist at Nykredit, one of Denmark’s major banks and the country’s largest mortgage lender, told news wire Ritzau.

“We didn’t have much else to spend money on so there were many first-time buyers who suddenly had savings,” she said.

“That’s what initiated the extraordinarily large buying activity which has now back to a normal year (level),” she said.

 READ ALSO: ‘Prove you’re going to stay’: The challenges of buying a home in Denmark as a foreigner

A loss of momentum in the market has been expected and signs have been apparent in recent months, she explained.

“It’s come gradually and the primary reason can be found in significant increases in interest rates during the spring,” she said.

An increase in interest rates has made it more expensive to take out a mortgage.

The trend in sales shows the market has slowed but not stalled, according to Nielsen.

“Now it is starting to be more of a buyer’s market, where sellers also have to realise that if they want to sell they have to lower the prices,” she said.

A further slowing down can be expected in 2023 and 2024, she predicted.

“There will now be a number of years with falling prices on the apartments market,” she said.

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Danish government returns debt payments from 138,000 people 

Around 138,000 people in Denmark have been unable to repay debts to the Danish state in 2022 after money they paid was refunded.

Danish government returns debt payments from 138,000 people 

From January to October 2022, 138,000 people in Denmark trying to square their debts with the government were refused due to confusion about whether the Danish Debt Collection Agency (Gældsstyrelsen) actually has the right to receive it, newspaper Berlingske reports.

Having a debt to the Danish public sector on your books can have serious financial consequences, including jeopardizing your eligibility to secure a mortgage.

Data from the Debt Collection Agency indicate the number of debts considered “not ready for recovery” has increased by 1.5 million this year. Half of those debts are connected to the Danish Tax Authority (Skattestyrelsen). 

In total, the 138,000 people were refunded 121 million kroner, including 17 million kroner in unpaid interest. That works out at an average refund of 750 kroner per person.

Based on the scale of the problem, the government will have to consider cancelling some of the debts, Peter Bjerre Mortensen, professor of public administration at Aarhus University, tells Berlingske. 

“They need to swallow some very big camels and/or simplify some legislation or forgive some debts, because right now it seems that things are still going the wrong way with regard to collecting public debt,” Mortensen said. 

The issues with ‘unpayable’ debts first arose in 2015 when EFI, the IT system Skat used to collect debt, was shuttered, according to Berlingske.

Debts to the Danish state have been growing since then. The parliamentary ombudsman said earlier this week that he would try to find out why individuals have been unable to repay debts.

“The ombudsman has received complaints from several members of the public and there have been articles in the media about people who could not repay their debt to the state,” wrote the ombudsman, Niels Fenger.

Tax minister Jeppe Bruus has previously recognised the issue with the repayment system.

“This is a huge challenge and something that must be worked on and improved,” he told newspaper Jyllands-Posten in September.

READ MORE: ‘Topskat’: What is Denmark’s high income tax bracket?