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Danish government expects house prices to rise in 2025

Denmark’s healthy economy is good news for homeowners who can expect their property to increase in value next year, according to the government.

Published: 2 September 2024 13:59 CEST
Danish government expects house prices to rise in 2025
The government expects houses to gain value next year, but the outlook for apartments is less certain. Photo: Bo Amstrup/Ritzau Scanpix

An assessment of the economy carried out for the government has found that the current growth in property prices is likely to continue throughout 2025.

The assessment, Økonomisk Redegørelse, forms part of the background for the draft budget announced by the Finance Ministry on Friday. It is essentially the government’s view of the current status of the economy and how they see its development in 2025.

It states that house prices will increase by an average of 2.7 percent this year and 3 percent next year.

“Property prices are supported by rising incomes and ongoing high employment, which in combination with gradually lower interest rates mean that potential buyers have higher sums available for purchasing a home,” the government states in its summary.

Converting those percentages into values, broadcaster DR writes that an “average” house of 140 square metres in size will have increased its value from 2.4 million kroner at the beginning of 2024 to 2.465 million kroner by the end of the year.

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Next year will see properties continue to gain value, with the example house reaching a valuation of 2.539 million kroner by the end of 2025.

The story is a little different for apartments, for which a new property tax effective from January 1st this year has impacted demand to a higher degree compared to houses.

In its assessment, the government does not give exact figures but says that apartment values could be lower by the end of 2025 compared to January 2024.

But it also notes that prices for apartments in Copenhagen increased in the second quarter of this year, and that this is a sign that “the risk of prices falling is reduced”.

Aside from house prices, the government predicts that the economy will grow by around 2 percent between now and the end of next year.

It also believes that inflation will stay at a stable 2 percent.

“The Danish economy is standing on strong foundations,” Economy Minister Stephanie Lose writes in the introduction to the economic overview.

Because planned wage increases on the labour market are higher than the 2 percent inflation rate, consumers will recover some of the buying power they lost during 2022, she also said.

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PROPERTY

Busiest August for housing in Denmark in three years as sales bounce back

The number of properties a month sold in Denmark continued to bounce back in August, according to new data, with a surge in summer house sales pushing the market to the busiest August in three years.

Published: 19 September 2024 10:42 CEST
Busiest August for housing in Denmark in three years as sales bounce back

A total of 7,248 residential properties were sold this August, according to the latest statistics from the Boligsiden housing website, 1.2 percent up on July and 1.4 percent up on August 2023, with sales being driven by the buoyant market for summer houses and owner-occupied apartments. 

“We are now back at a level similar to what we had a few years back, before interest rates started to rise,” Mira Lie Nielsen, an economist at Nykredit, told the Ritzau newswire. “There have been high wage increases, interest rates are on the way down, and then there is a low supply of apartments, which means that both the prices, but also the transactions, are climbing nicely again.”

Below you can see a diagram by Boligsiden showing the number of properties sold in August over each of the past six years, showing the peak during the Covid-19 pandemic in 2020.

Source: Boligsiden

Birgit Daetz, housing economist and communications director at Boligsiden, said that the increase in sales between July in August, although smaller than usual, did not mean the market was slowing down. 

“This is mainly due to the fact that an extraordinary number of homes were sold in July this year, which is why the increase in August sales seems a little smaller. In other words, this is a good sales result for August this year, which is close to the average sales for the same month in the years before corona,” she said in a statement.

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The number of detached and semi-detached houses sold fell 1.8 percent from July to August, with falls in Southern Denmark and Zealand only partly compensated by a rise in the number of house sales in Central Jutland, Greater Copenhagen and North Jutland. 

“It is not unusual that the housing market is slightly more affected by the summer holiday break compared to the other housing types, because it is often families with children who buy a house, where the majority of them are on holiday at the same time as the school summer holidays, which continue into August,”  Daetz explained.

“However, despite the summer holidays, this year’s August sales of houses exceed the average sales for the month in the years before corona in the vast majority of the country, which shows that house sales are still at a good level.”

The number of summer houses sold soared by 13.6 percent between July and August, with owners presumably waiting until the end of their summer holidays before finalising sales. 

Sales of owner-occupied apartments were also strong, rising 5.8 percent between July and August, and as much as 9.5 percent in Copenhagen, something Daetz said continued an established trend. 

“For a relatively long time, we have seen growth in the market for owner-occupied flats, with increasing commercial activity and higher sales prices. It is a surprising development, which has occurred despite the fact that property taxes have in many cases increased for owner-occupied flats – especially in the capital,” Daetz said.

Even after this year’s rebound, however, the Danish housing market is still 20 percent slower than it was in the years running of to the Covid-19 pandemic and the following period of high inflation. 

“Even though the apartment market seems to be hot at the moment, sales are still lagging behind compared to the average August sales in the years before corona by 20 percent,” Daetz said. 

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