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Denmark’s house prices in biggest jump for two years

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Ritzau/The Local - [email protected]
Denmark’s house prices in biggest jump for two years
House prices and the number of sales both went up in Denmark in the second quarter of 2023. File photo: Thomas Lekfeldt/Ritzau Scanpix

The housing market in Denmark continues to go through a period of growth with prices seeing the largest quarterly increase for two years.

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The second quarter of 2023 saw house prices go up by 3.1 percent and apartments by 4.1 percent compared to the first quarter, according to new data from Finans Danmark, the real estate organisation for the country’s banks.

House prices fell in late 2022 after a dramatic spike during the Covid-19 pandemic and the current price levels still compare favourably to the second quarter of last year.

“The housing market is rediscovering its melody. Prices have increased by the most in two years and trading activity has gone up a gear,” the senior economist with Arbejdernes Landsbank, Jeppe Juul Borre, said in a written comment on the data.

The number of sales of apartments and detached houses both increased for the second successive quarter.

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Borre said that was positive following a period of uncertainty related to interest rate increases.

“There is now more calm around interest rates and the economic situation and that is giving the housing market more of a tailwind,” he said.

A factor in the higher number of sales is incoming new property tax rules, the Danish Confederation of Industry’s economist, Allan Sørensen, noted in a comment.

The rules, which take effect on January 1st next year, provide for lower property tax rates for people who bought their houses in 2023 than for those who buy them in 2024, after the rules come into force.

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Borre made a similar observation and said that the transition to the new system could cause “unusual movement” in some sections of the housing market

Apartments in large cities could see particularly high numbers during the period, he said.

“After that, we will so the market shrink, because a lot of people want to bring forward their home purchases in those areas,” he said.

READ ALSO: Copenhagen house prices propped up by new tax rules

Property tax will from next year be based on updated property valuations. Because apartments and houses in and near Copenhagen and other major cities have seen their values rise the most on recent years, these properties are likely to see the biggest difference in tax calculations under the new rules.

But people who already owned their homes before the change takes effect will see lower rates applied to protect them from higher tax bills.

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