House prices in Denmark are falling at the fastest pace since 2011 as higher borrowing costs push buyers to negotiate increasingly bigger discounts to asking prices.
(Bloomberg) — House prices in Denmark are falling at the fastest pace since 2011 as higher borrowing costs push buyers to negotiate increasingly bigger discounts to asking prices.
Denmark’s challenges echo those of neighboring Sweden, where the market is slumping at the fastest pace since the 1990s.
While the Danish housing market so far has fared better, rapidly rising interest rates are putting pressure on prices after a long period of sub-zero rates.
According to latest data, house prices dropped 2.1% in the third quarter from the previous three months, Finans Danmark said on Tuesday.
That’s the biggest drop in 11 years.
Last quarter, houses sold on average at prices 7.3% lower than they had been listed at, according to the country’s biggest industry group for banks and mortgage lenders.
That compares with a price reduction of 3.6% a year earlier.
“The market is characterized by significantly fewer trades and rising price reductions,” Mira Lie Nielsen, a chief analyst at Nykredit Realkredit, Denmark’s biggest mortgage bank, said in a note.
“We expect that both house and apartment prices will drop by about 10% from a peak this summer to a trough in the autumn of next year.”
Danes may also encounter rising rates after a sudden policy change in Japan may make it less attractive for Japanese investors to buy Danish mortgage bonds, according to Mathias Dollerup Sproegel, a senior economist at Sydbank.
The investors have traditionally been among the largest buyers of the Danish assets.
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