Danish house prices could fall by nearly 10 percent in 2023

A new forecast by Denmark’s central bank Nationalbanken predicts that house prices could fall by 9.4 percent this year.

Danish house prices could fall by nearly 10 percent in 2023
Denmark's central bank forecasts a drop in house prices by up to 10 percent this year. File photo: Mathias Løvgreen/Ritzau Scanpix

The new forecast shows increased pessimism from the central bank over house price trends in 2023, given the previous forecast from September 2022 predicted a drop of 5.6 percent for the current year.

In the forecast, published on Wednesday, the National Bank writes that the predicted trend “reflects a market where sellers have not sufficiently reduced asking prices in relation to what buyers are willing to and can afford to pay in relation to the steep interest rate increases”.

“There have been large knockdowns [due to interest, ed.] which have increased further in recent months. That indicates that further falls in price await,” it said.

Nationalbanken raised its lead interest rate in December by 0.5 percent to 1.75 percent.


Next year could also see a “technical decrease” in property prices according to the central bank. This will be at a far more modest level of 0.3 percent and is primarily a result of the calculation technique by which 2023 and 2024 prices are compared, according to news wire Ritzau.

An actual bottoming-out of house prices is expected in December this year, Nationalbanken forecasts. At this point, prices will be back at 2020 levels should the latest prognosis bear out.

Property prices will subsequently begin to increase again but at a lower rate than their decrease during 2023. As such, the average house price in 2024 will be less than the average for 2023.

2025 will see a return to house prices at a higher average level than the prior year, Nationalbanken predicts.

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Home sales in Denmark sink to lowest level since 2013

The number of home sales in Denmark fell over the last three months to the lowest level since the start of 2013, when the country was still emerging from a protracted housing slump.

Home sales in Denmark sink to lowest level since 2013

Only 9,931 homes were sold in the last three months of 2022, according to the latest figures from the trade body Finance Denmark, the lowest number for 39 three-month periods. At the same time prices have fallen back to the levels they were at at the end of 2020. 

“The second half of the year in particular showed a marked decline in housing transactions,” Brian Friis Helmer, economist at Arbejdernes Landsbank. “The headwind comes from higher interest rates, higher energy bills and financial uncertainty.” 

Prices of apartments fell by 7.2 percent last three months of the year compared to the same period in 2021, while prices for detached houses fell by 6.3 percent. 

Bo Sandberg, housing economist at the Confederation of Danish Industry, said that this made Denmark one of the European countries which had seen the biggest falls. 

“We are pretty much only exceeded by Sweden,” he wrote in a commentary. “The peak of the price increases, which occurred during an exceptionally favourable and historically unique period in the housing market, has now been shaved off, and prices are back at the 2020 level.”

A survey of Danish home owners carried out by Finance Denmark in February 2023 found that a slim majority of 55 per cent expected prices to remain stable over the coming 12 months, with only 20 percent expected prices to drop more than 1 percent. 

This compared to 30 percent who expected a drop of more than 1 percent a year ago. 

Only 2.9 percent of home owners expected a fall of more than 5 percent, while 13 percent expected prices to rise over the next year, with 4.5 percent expecting a rise of more than 5 percent. 

“Energy prices have fallen significantly in recent months, and consumer prices are not rising as quickly as in the past. At the same time, more people have probably got used to the higher level of interest rates,” Ane Arnth Jensen, deputy managing director of Finance Denmark, said in a press statement.

“This may be part of the explanation for the fact that the Danes expect the future to be a little brighter, and many expect a calmer housing market in the coming year. But whether that will happen, only time will tell.”