For the first time in seven years, the constant increase in apartment prices has come to a halt, as indicated by a statement from the Boligsiden website that collects data from the country’s estate agents.
Then Vs Now
Previously, prices had increased by 8 to 10 percent annually. Since last summer, the scenario has changed, as the national average of 27,700 kroner per square metre has stayed the same over the last year.
Roughly speaking, a 100 square metre apartment cost 2.77 million in 2018, and the price is unchanged today.
The declining demand
The stagnant nature of apartment prices is primarily due to decreasing demand in Copenhagen and Aarhus, which account for nearly 50 percent of the total apartments in Denmark.
There are two reasons for the slowdown in demand: the high apartment prices (which increase year after year) and the 2018 implementation of stricter home rules.
The rules state that the high-debt households will not be able to get mortgages with a short maturity and repayment period. Additionally, the consumer has to pay 5 percent of the purchase price himself despite taking a home loan.
“The public had concerns about the large increases, and therefore the home rules have tightened. This means there are fewer people who can now afford to buy apartments, and that has meant that the sky-high prices have stopped,” explained Birgit Daetz, a home economist at Boligsiden, to TV2
Looking outside the big cities
Home prices – villas and townhouses – have risen in Vejle, Odense and a few municipalities in the capital in the past year.
“The high prices mean that more people are now looking outside the big cities. They can get more with the same amount of money,” explained Birgit Daetz.
For the same reason, the prices in Copenhagen and Aarhus have fallen by 1 to 2 percent.
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