Following four consecutive years of negative interest rates, the International Monetary Fund (IMF) has urged Denmark to act in order to avoid a potential housing bubble.
No country has had negative interest rates for a longer period of time as Denmark has. Apartment prices, which increased by 11.6 percent between February 2015 and 2016, have risen by over 50 percent since 2009.
Between February last year and he same month this year, apartment prices have increased by 11.6 percent
“We strongly encourage the authorities to take early action to lean against the wind on house price increases,” David Hofman, the IMF mission chief to Denmark, told Bloomberg News. “We see a need for action on a number of points.”
“The low interest rates are fuelling rapid house price increases. Though a bubble isn’t necessarily around the corner, we do think that if these things are left unchecked we may fairly soon reach a situation where house price levels are less comfortable.”
READ MORE: Danish housing market still going full steam ahead
Against the grain
IMF recommends establishing initiatives that curtail regulation on the renting market, while the housing prices would benefit from zoning rules.
House prices have risen strongly in Denmark despite general price increases stagnating and growth being weak.
