Nationwide, the average price of owner-occupied flats stood at DKK2.02 million (EUR271,950) in March 2016. On the other hand, one-family homes are priced at an average of DKK1.9 million (EUR256,080) over the same period.
- In the Capital region, i.e. Copenhagen and its hinterland, average price of owner-occupied flats rose by 5.5% y-o-y to DKK2.32 million (US$312,000) in 2015
- In Zealand region, house prices rose by 7.7% y-o-y to an average of DKK1.32 million (US$177,000) in 2015
- In Southern Denmark, house prices increased 8.2% to an average of DKK1.25 million (US$168,260) 0ver the same period
- In Central Denmark, house prices fell by 3.5% y-o-y to DKK1.6 million (US$215,470) in 2015
- In North Zutland, house prices rose by 6.9% y-o-y to an average of DKK1.34 million (US$180,760) last year
One-family homes saw more modest price rises of 2.4% y-o-y in Q1 2016 (2.4% inflation-adjusted). In a quarterly basis, one-family home prices increased 1.8% (1.4% inflation-adjusted) during the latest quarter.
Because of strong house price rises, the International Monetary Fund (IMF) has recently urged the Danish government to reverse its negative interest rates mandate and introduce new policies, such as zoning rules and relaxing rental market regulations, to avoid a disastrous housing bubble.
“We strongly encourage the authorities to take early action to lean against the wind on house price increases,” said David Hofman of the IMF.
Despite Denmark’s association with liberalism, it is not easy to acquire property here.
Nonresidents may not purchase real property here unless the person:
- Has previously resided in Denmark for at least five years;
- Is an EU national working in Denmark; or,
- If a non-EU national, has a valid residence or business permit.
There are some special restrictions on foreign ownership in some areas, especially when buying summer holiday homes. This is particularly prevalent in coastal areas. These are popularly known as the ‘anti-German rules’; because they are designed to prevent coastal areas from being overrun by German second home owners.
However, the purchase of “all-year-round” properties, which are not located in popular areas along the coast, is possible as long as you satisfy the aforementioned requirements.
The Danish economy grew by a meager 1.2% in 2015, after an expansion of 1.3% in 2014, and contractions of 0.5% in 2013 and by 0.7% in 2012, according to the IMF. The economy is expected to expand by 1.2% this year and by another 1.9% in 2017, according to the European Commission.
Analysis of Denmark Residential Property Market »
The result is that rental yields on apartments in Copenhagen have hardly moved over the past two years. Apartments of 120 square metres (sq. m.) yield 4.84%. Apartments of 50 sq. m. yield 5.27%.
These are moderate yields.
Capital Gains: Capital gains from sale of immovable property in Denmark earned by nonresident owners are taxed at a special rate of 24%, because they do not pay any county income tax.
Inheritance: Inheritance of the immediate family (children, grandchildren, parents) is subject to total estate tax at a flat rate of 36.25%. No tax is levied on the spouse’s inheritance.
Residents: Income earned by residents is taxed at various progressive rates, up to around 55.60%. Tax on income consists of state tax, AM tax, municipal tax, and church tax.
Rent Control: There are five different forms of rent control in Denmark depending upon the age of the building and the system is very complex. However, rents on dwellings constructed after 1991 are exempt from rent control.
Legal Disputes: The system is confusing. “It is not possible for lay people to properly calculate the maximum rent applicable to a particular tenancy,’ notes the EUI report on Danish Landlord and Tenant law. “This is the cause of many legal disputes, which must be resolved by the judicial system.”
Boosted by government spending and the global recovery, Denmark’s GDP rose by around 1.6% in 2010 and by another 1.1% in 2011. However it shrank again by 0.7% in 2012, and 0.5% in 2013. In 2015, the economy grew by a meagre 1.2%, after expanding by 1.3% in the previous year.
The economy is expected to expand by 1.2% this year and by another 1.9% in 2017, according to the European Commission.
Inflation slowed sharply to 0.2% last year, from 0.4% in 2014, 0.8% in 2013 and an average of 2.2% from 2000 to 2012, according to the European Commission. Inflation is expected to hit 0.4% this year, based on government estimates.
Denmark’s unemployment was 4.2% in April 2016, down from 4.5% in the previous month and 4.7% a year earlier, according to Statistics Denmark. Over the same period, unemployment for men stood at 4.1% while it was 4.3% for women. Overall unemployment had averaged 4.9% from 2007 to 2015.
There were about 114,558 unemployed persons (seasonally-adjusted) in the country in April 2016, down by 8.8% from 125,670 in the same period last year, based on figures from Statistics Denmark.
After the Social Democrat prime minister Helle Thorning-Schmidt took austerity measures that improved government finances, the country recorded a public budget surplus of 1.2% of GDP in 2014, after a deficit of 1.1% of GDP the previous year. However, in 2015, spending increases again in an effort to prop up the economy, resulting to a budget deficit of 2.1% of GDP.
Denmark’s budget deficit is projected at 2% of GDP this year, still below the EU threshold of 3% of GDP.
Gross public debt stood at 40.2% of GDP in 2015, down from 44.8% of GDP in 2014. The country’s public debt is projected to decline to further to 38.7% of GDP this year, according to the European Commission.
Mrs Thorning-Schmidt’s measures, which successfully improved the country’s finances, were however unpopular, resulting in her party’s defeat in 2015 and her resignation. In June 2015, Lars Lokke Rasmussen leader of the centre-right liberal party, Venstre, returned for his second innings as Denmark’s PM.