Prices of Danish apartments have shed almost 10% in six months as rising interest rates are freezing the Nordic country’s housing market.
(Bloomberg) — Prices of Danish apartments have shed almost 10% in six months as rising interest rates are freezing the Nordic country’s housing market.
Denmark is facing some of the same challenges as neighboring Sweden where a housing boom spurred by the pandemic has been replaced by the worst slump in decades. While the decline in Danish prices so far has been less steep, a dramatic drop in activity at local real estate agents suggests that more is to come.
Apartment prices fell 1.8% in December from a month earlier, or 9.7% from a June peak, according to seasonally adjusted data published on Wednesday by home a/s, one of Denmark’s biggest real estate agents. Prices for single-family homes that declined less last month are now down 7.8% from a February peak.
“It’s going downhill fast, but that should also be seen in light of the high price increases we saw during the pandemic,” Louise Aggerstrom Hansen, a chief analyst at Danske Bank, said in a note. “Even though house prices have dropped, it’s still more expensive to buy a home than it was a year ago. That indicates prices will have to fall further.”
Danes, helped by the world’s longest stretch of negative central bank interest rates, have for years been used to borrowing money almost for free. But the interest rate on a 30-year fixed mortgage is now about 5%, up from about 1% a year and half ago. At the same time, consumer price inflation is close to 10%, the highest level in 40 years.
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