Last Updated:
May 12, 2009
Danish property prices continue to decline in 2009 after property prices peaked between 2006 and 2007.
The average price of single-family and terrace houses in Denmark fell 10.8% in Q1 2009 to DKK12,452 (€1,669) per sq. m. from a year earlier, according to Realkreditradet figures. In the same period, average the average price of owner-occupied flats dropped by 16% to DKK17,655 (€2,367) per sq. m., price of holiday homes declined by 13.1% to DKK16,521 (€2,214) per sq. m.
Copenhagen experienced more severe house price falls in Q1 2009. From a year earlier, the average price of owner-occupied flats dropped by 18.1% to DKK21,711 (€2,910) per sq. m. The average price of single-family and terrace houses declined by 16.3% to DKK21,174 (€2,838) per sq. m.
The price falls will continue until at least 2010, according to Steen Bocian, head economist at Danske Bank.
Denmark is unusual within the European Union in that nonresidents can only acquire Danish property if: they have previously resided in Denmark for five years; they are EU nationals working in Denmark; or they are non-EU nationals with a valid residence or business permit in Denmark.
The average price of single-family and terrace houses in Denmark fell 10.8% in Q1 2009 to DKK12,452 (€1,669) per sq. m. from a year earlier, according to Realkreditradet figures. In the same period, average the average price of owner-occupied flats dropped by 16% to DKK17,655 (€2,367) per sq. m., price of holiday homes declined by 13.1% to DKK16,521 (€2,214) per sq. m.
Copenhagen experienced more severe house price falls in Q1 2009. From a year earlier, the average price of owner-occupied flats dropped by 18.1% to DKK21,711 (€2,910) per sq. m. The average price of single-family and terrace houses declined by 16.3% to DKK21,174 (€2,838) per sq. m.
The price falls will continue until at least 2010, according to Steen Bocian, head economist at Danske Bank.
Denmark is unusual within the European Union in that nonresidents can only acquire Danish property if: they have previously resided in Denmark for five years; they are EU nationals working in Denmark; or they are non-EU nationals with a valid residence or business permit in Denmark.
Read Price History »
RENTAL YIELDS
Last Updated: Apr 30, 2009
Average gross rental yields on Copenhagen apartments average 4.59%, more or less unchanged from last year (4.61%).
Average prices per square metre (sq.m.) were also more or less unchanged, in our sample, at €4,452 per sq. m., down from €4,620 per sq. m.
Official StatBank Denmark figures show a 4.92% y-o-y fall in apartment prices nationally, to end-Q3 2008, and a 10.81% fall in single family and terrace house prices to end-Q1 2009 (in real terms, a fall of 12.91%).
Average prices per square metre (sq.m.) were also more or less unchanged, in our sample, at €4,452 per sq. m., down from €4,620 per sq. m.
Official StatBank Denmark figures show a 4.92% y-o-y fall in apartment prices nationally, to end-Q3 2008, and a 10.81% fall in single family and terrace house prices to end-Q1 2009 (in real terms, a fall of 12.91%).
TAXES AND COSTS
Last Updated: Nov 23, 2009
Rental Income: Rental income is taxed at progressive rates, from 5.48% to 15%. 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 are taxed at a rate of 28% for companies, while non-resident owners are taxed at a special rate of 32%, because they do not pay any county income tax.
Inheritance: Inheritance tax is imposed at a flat rate of 15% on the estate if the successor is immediate family (children, grandchildren, parents, grandparents), but no tax is levied on the spouse’s inheritance.
Residents: A resident is taxed on his worldwide income, levied marginally on an aggregate scale.
Capital Gains: Capital gains from sale of immovable property in Denmark are taxed at a rate of 28% for companies, while non-resident owners are taxed at a special rate of 32%, because they do not pay any county income tax.
Inheritance: Inheritance tax is imposed at a flat rate of 15% on the estate if the successor is immediate family (children, grandchildren, parents, grandparents), but no tax is levied on the spouse’s inheritance.
Residents: A resident is taxed on his worldwide income, levied marginally on an aggregate scale.
BUYING GUIDE
Last Updated: May 28, 2007
Roundtrip transaction costs in Denmark are among the lowest in Europe, at 1.3% to 3% of the property value. The greater part of the costs is accounted for by the real estate agent’s commission at 0.5% - 2%, usually paid by the seller.
LANDLORD AND TENANT
Last Updated: Nov 14, 2006
Danish rental laws and practices are extremely pro-tenant.
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.”
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.”
ECONOMIC GROWTH
Last Updated: May 12, 2009
One of the first in Europe to enter recession
Denmark is the smallest and most southern of the Scandinavian countries with a population of 5.5 million. Its modern market economy generates high living standards with a GDP per capita of US$62,625 in 2008, one of the highest in the world. The country offers an interesting mix of lively cities and rural countryside. Denmark joined the European Economic Community (now the EU) in 1973, however, it has decided not to adopt the euro. Even so, the Danish krone is pegged to the euro (€1 = DKK7.45092).
In 2008, Denmark became one of the first countries in Europe to enter a formal recession. The economy contracted by 1.14% in 2008, a reversal from the 1.65% growth recorded in 2007. The economy is expected to contract by as much as 4% in 2009, and have a minor recovery in 2010 with a 0.4% GDP growth.Inflation in Denmark increased to 3.4% in 2008 from 1.7% in 2007. Deflation of prices by 0.32% and 0.03% is expected in 2009 and 2010, respectively.
As of March 2009, unemployment rate has risen to 3.2% with a total of around 90,000 unemployed. Unemployment rate is expected to maintain at the same level at the end of the year, and rise to 4.5% in 2010.
Government initiatives have been put in place to soften the effects of the recession. Stimulus packages in October 2008 and January 2009 aim to guarantee the financial sector from unsecured bank debts from commercialized loans, and strengthen the capital base of banks. In March 2009, majority support for tax reforms has been secured to boost individual’s disposable income.
