The average price of detached and terraced houses in the capital city Copenhagen soared by 11.3% during the year to end-Q1 2015 (11.1% inflation-adjusted) to DKK28,295 (US$4,107) per square metre (sq. m.), according to the Association of Danish Mortgage Banks (ADMB). Quarter-on-quarter, house prices in Copenhagen increased 1.4% (1.4% inflation-adjusted) in Q1 2015.
Property price rises in the rest of the country were more modest. Detached and terrace house prices in Denmark rose by 5.7% (5.5% inflation-adjusted) y-o-y to Q1 2015, to an average of DKK11,737 (US$1,704) per sq. m. On a quarterly basis, detached/terraced house prices in the country rose by 3.9% (3.9% inflation-adjusted) during the latest quarter.
During the year to end-Q1 2015:
- In the Capital region, i.e. Copenhagen and its hinterland, average detached/terraced houses prices rose by 7.6% (7.4% inflation-adjusted) to DKK20,663 (US$2,999) per sq. m.
- In Zealand region, house prices rose by 5.8% (5.6% inflation-adjusted) to DKK9,904 (US$1,437) per sq. m.
- In Southern Denmark, house prices increased 3.4% (3.2% inflation-adjusted) to DKK8,824 (US$1,281) per sq. m.
- In Central Denmark, house prices rose by 5.2% (5% inflation-adjusted) to DKK10,821 (US$1,571) per sq. m.
- In North Zutland, house prices rose by 5.4% (5.2% inflation-adjusted) to DKK8,360 (US$1,213) per sq. m.
Apartments fared specially well. Owner-occupied flats' average price rose 9.6% (9.4% inflation-adjusted) y-o-y to Q1 2015, to an average of DKK21,306 (US$3,092) per sq. m., according to ADMB. But holiday home prices were up by just 2.6% (2.4% inflation-adjusted) to DKK13,736 (US$1,994) per sq. m..
The Danish economy grew by a meagre 1% in 2014, after contracting by 0.5% in 2013 and by 0.7% in 2012 and minimal growth of 1.2% in 2011 and 1.6% in 2010, according to the International Monetary Fund (IMF). The economy is expected to expand by 1.8% this year and by another 2.1% in 2016, \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, and grew a meagre 1% in 2014.
The economy is expected to expand by 1.8% this year and by another 2.1% in 2016, according to the European Commission.
Virtue unrewarded: Socialists slash fiscal deficit, get booted out.
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. Gross public debt stood at 45.2% of GDP in 2014. Mrs Thorning-Schmidt's measures were however unpopular, resulting in her party's defeat in 2015 and her resignation.
Inflation was 0.6% in 2014, according to the IMF.
Denmark’s unemployment was 4.5% in May 2015, down from 4.8% in a year earlier, according to Statistics Denmark. Unemployment had averaged 7.2% from 2010 to 2014.
In June 2015, Lars Lokke Rasmussen leader of the centre-right liberal party, Venstre, returned for his second innings as Denmark’s PM.