Rental prices explode while housing sales fall
It's cheaper to buy than rent as the housing market continues to be affected by economic down-turn
As house prices continue to plummet across Denmark, the cost of rental properties is going up.
A recent survey conducted by Boligportal.dk for Politiken newspaper revealed that the rent of an average three-bedroom apartment has increased by 15 percent in Copenhagen and 20 percent in Aarhus since 2007. During the same period, the price of buying a housing property has decreased by 22 percent - the biggest dip in the last 70 years.
According to the data, an average two-bedroom rented apartment today costs 7,288 kroner a month in Copenhagen compared to 6,400 kroner in 2007, while the present cost of a four-room apartment is 14,049 kroner, whereas it was only 11,764 kroner in 2007.
The trend isn’t only affecting the capital region. Aarhus’s housing market has seen the cost of a three-bedroom rented apartment rise from 6,983 kroner to 8,316 kroner a month since 2007.
According to Henrik Løvig, the administration director of Boligportal.dk, it’s simply a matter of supply and demand.
“When consumers are unwilling to buy, there is a rise in demand for rental apartments and this has been reflected in the analysis,” Løvig told Politiken. “Moreover, we believe that the population growth in major cities has boosted the demand for rental housing.”
Jesper Larsen, the chief economist at the national tenant association Lejernes LO, told Politiken that the rise in the rental housing is a big problem.
“Several tenants are facing acute housing shortage,” Larsen said. “They take an expensive residence in the thought that they will only be there for a short period until they find something that suits their budget, but affordable solutions are tougher and tougher to find.”
The increase in rental prices came as a surprise to the Socialdemokraterne’s housing spokesperson, Jan Johansen.
“Holy crap, that doesn’t sound very good,” he told Politiken in response to the increases. “This development will clearly mean that fewer people can afford a property in the capital region. It’s the school teacher and the policeman who are being held out [of the market].”
Johansen, however, wasn’t able to offer any suggestions for changing the situation.
“I must admit that I don’t have anything concrete to offer that can solve this problem,” he said. “But a solution needs to be found. This development cannot continue.”