Foreigners could boost summerhouse market

Summerhouse prices have stalled, leading politicians to argue for the aboilition of rules that prevent foreigners from buying the coveted holiday properties

Owning a summerhouse is a privilege reserved for Danes, but low prices and a high number of vacancies may increase the pressure on the government to do away with the special rule.

The summerhouse ruling restricting purchases to Danish citizens was granted to Denmark before it signed the Maastricht Treaty in 1993, and was introduced to ensure that foreign buyers wouldn’t drive up the price.

Germans in particular are fond of coastal summerhouses in Denmark, which has a far longer coastal region relative to its population than Germany – around 770 Danes share every kilometre of Danish coastline, while around 33,500 Germans share every kilometre of their coast.

The Danish summerhouse market, however, is in bad shape however. In June, a record 13,162 summerhouses were on the market and that number was only reduced by two in July.

“It’s a clear indication that the summerhouse market is having a really hard time,” Lise Nytoft Bergmann, a housing economist at Nordea, told Ritzau.

Summerhouses in western Jutland are faring the worst, with summerhouses spending an average of 410 days on the market, a 16.5 percent increase compared to June 2012. Nationwide, summerhouses are failing to follow the general upward trend for property and have even failed to follow the rate of inflation.

Since the second quarter of 2012, summerhouse prices have risen only 0.6 percent, while apartment prices have risen 12 percent and house prices four percent. Inflation was 1.3 percent over the period.

“Summerhouses are the segment of the housing market that has experienced the weakest price development over the past year,  which is not surprising given the negative house price indicators of the market,” Realkredit Danmark's chief economist, Christian Hilligsøe-Heinig, told Berlingske.

Increased interest from abroad may get the market moving, however. Some foreigners can be granted a special dispensation to buy a Danish summerhouse if they can prove that they have a significant connection to Denmark.

According to Berlingske, around 100,000 Norwegians qualify for permission to buy a Danish summerhouse and between 2011 and 2012 the number of Norwegian owning summerhouses doubled. A total of 406 Norwegians have bought Danish summerhouses.

It is still rather difficult to be granted special dispensation and so far only 779 foreigners have managed to buy summerhouses while 283 have had their applications rejected, according to figures from the Justice Ministry.

According to Berlingske, at least 50,000 Danes own foreign holiday homes. Some politicians say that this presents a double standard and is a counter-productive move given that foreign summerhouse owners could provide an economic boost to struggling provincial communities.

“Danes are buying apartments in Berlin and properties in southern France,” Liberal Alliance's EU spokesperson, Mette Bock, told DR Nyheder. “So we want to be able to buy holiday homes in Europe but don’t want other Europeans to do it in Denmark. It’s a double standard.”

Bock was pleased, however, by the increasing number of foreigners claiming a connection to Denmark and buying Danish summerhouses.

“It’s great that more and more people are taking advantage of the loopholes in order to buy a property in Denmark,” she said.

The government currently says that it has no intention to change the rules and make it even easier for foreign buyers.

 “We cannot be sure that Germans, Brits or anyone else will end up buying homes in Lolland or Langeland where we need them most,” the housing minister, Carsten Hansen (Socialdemokraterne), told DR Nyheder. “They would prefer to buy property in more attractive areas.”

He added that summerhouses were currently affordable to the majority of Danes and this could change if the market was opened internationally, although Bock does not share his concern.

“If prices in the market rise, it will benefit Denmark and Danes on the whole," she said. "It’s a question of whether we want a free market where we can buy and sell freely without protectionist rules.”

According to Venstre MEP Jens Rohde, there is no pressure within the EU for Denmark to change its summerhouse rules.

“I am not an ideological opponent of removing the rules that prevent foreigners from buying Danish summerhouses,” Rohde told Berlingske. “I can see the double standard that Danes buy a lot of holiday homes in other countries but foreigners are not allowed to buy properties here. So if there is a demand from a council with a lot of empty summerhouses, or from the tourist industry, I am willing to draft the issue.”

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