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Last Updated: Jul 18, 2015




Residential property prices in Copenhagen are now rising strongly, after a slow recovery from the crisis. The economy is finally improving, and demand for housing is strengthening.

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.

Denmark house pricesApartments 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 »


RENTAL YIELDS
Last Updated: Apr 28, 2014



Residential property prices in Denmark have been stable during the past three years (2012-2014), according to StatBank Denmark. In Copenhagen, our research suggests that the price of apartments has remained stable, with maybe some upward price movement for the smallest apartments. Meanwhile, in Copenhagen, rents have also been stable.

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.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Dec 05, 2014



Rental Income: Rental income subject to state income tax, from6.83% to 15%, and municipal income tax at a flat rate of 24%. Landlords have two options when computing for taxable income: (a) itemized deductions, and (b) standard deduction to account for income-generating expenses.

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.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Dec 08, 2014



Roundtrip transaction costs in Denmark are among the lowest in Europe, at 1.23% to 3.23% of the property value. The greater part of the costs is accounted for by the real estate agent’s commission at 0.5% to 2%, usually paid by the seller.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Nov 14, 2006



Danish rental laws and practices are extremely pro-tenant.

Denmark luxury housesRent 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.”

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Jul 18, 2015


Danish economy remains weak

Denmark gdpIn 2008, Denmark was one of the first countries in Europe to go into recession. The economy contracted by 0.7% in 2008 and by 5.1% in 2009.

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.


Denmark unemploymentAfter 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.







  • Strong and stable economy
  • Low transaction costs
  • Extremely pro-tenant market
  • Limited ownership for aliens
  • Very high rental income tax
  • Low yields in Copenhagen
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €4,279 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.84% For a 120 sq. m. property, usually an apartment.
Rent/month: €2,071 For a 120 sq. m. property.
Income Tax: 3.67% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 2.23% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 24.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Strongly Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

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