Denmark's Residential Property Market Analysis 2025

Prices in the Danish housing market continue to trend upward, supported by strong buyer demand, falling interest rates, and limited new supply due to the still-struggling residential construction sector, raising concerns about potential shortages in major urban centers.

This extended overview from Global Property Guide covers key aspects of the Danish housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Residential property prices in Denmark continue their upward trajectory, supported by strong buyer demand, falling interest rates, and a limited supply of new housing. According to the latest data from Statistics Denmark, the House Price Index rose by 3.7% in Q4 2024 (2.0% inflation-adjusted). "Housing sales activity has increased, and house prices have continued to rise in 2024. This development is considered to be an expression, among other things, of the fact that the adjustment after interest rate increases has largely taken place," commented the Ministry of Economic Affairs.

Denmark's house price annual change:

Data Source: Finans Danmark.

Transaction-based data from the Association of Danish Mortgage Banks (Finans Danmark), which reflects actual prices from completed sales, demonstrated price increases across all residential property segments. The strongest growth in the average price per square meter was recorded in the detached and terraced house segment, where prices rose by 10.77% year-on-year in Q4 2024 to DKK 17,904 (USD 2,560). Prices for owner-occupied flats increased by 5.32% to DKK 35,736 (USD 5,110), while holiday homes saw a 2.69% rise, reaching DKK 21,970 (USD 3,141) per square meter.

Data Source: Finans Danmark.

The Capital Region remained Denmark's most expensive housing market, with prices across all property types significantly exceeding the national average, almost double in the case of detached and terraced houses. In contrast, North Jutland continued to offer the most affordable options among the five main regions.

Average per sqm price of dwellings sold by region:

Recent indicators suggest that the positive price trend has extended into 2025. As of May, the Boligsiden Market Index reported annual price increases across all three major segments. Owner-occupied apartments saw the sharpest growth, rising by 11.7% to an average of DKK 38,937 (USD 5,670) per square meter. Detached and terraced houses increased by 5.2% to DKK 18,212 (USD 2,652), while holiday homes rose by 4.4% to DKK 24,081 (USD 3,507) per square meter.

The Ministry of Economic Affairs, in its December 2024 Economic Survey, projected a 3.3% increase in house prices for 2025 and a further 3.0% in 2026, driven by lower interest rates and rising household incomes. Nordea Bank presented a slightly more optimistic outlook, forecasting a 4.6% increase in 2025 and 3.5% in 2026. "These expected increases will primarily be driven by continued growth in household disposable income and a strong labor market. In addition, price increases will be supported by the low number of newly built houses in the market for several years, driving up prices of the existing housing stock. However, towards the end of the forecast period, we expect the housing market to dampen slightly as the normalization process comes to an end," commented Nordea's chief analyst Jan Størup Nielsen.

Historic Perspective:

Housing Cycles in Line with Global Patterns

The early 2000s were characterized by a significant housing boom for the Danish residential property market, with house prices increasing rapidly due to low interest rates, economic growth, and favorable credit conditions. By the end of 2004, nominal house prices rose by 14.1% year-on-year, accelerating to 26.3% in 2005. This boom was accompanied by high levels of construction, with nearly 34,000 new housing units started in 2005 alone.

However, this period of rapid growth began to cool down in 2007, when house prices stagnated, marking the peak of the boom. The global financial crisis of 2008 then triggered a severe downturn. House prices fell sharply, with a nominal decline of 11.1% year-on-year in 2008 and a further 4.8% drop in 2009. The crisis also led to a significant reduction in construction activity, as credit tightened, and consumer confidence waned. By 2009, only 11,155 new housing units were started, down from 35,546 in 2006.

The years following the crisis were marked by a slow and uneven recovery. While 2010 saw a brief rebound with a 2.6% nominal increase in house prices, the market dipped again in 2011. It wasn't until 2013 that the market began to recover more consistently. Low interest rates, introduced by the Nationalbanken to stimulate the economy, played a crucial role. Between 2013 and 2019, house prices increased steadily each year, and construction activity also picked up. By 2019, the number of new housing units started to reach 40,964, reflecting renewed confidence in the market.

The onset of the COVID-19 pandemic in 2020 initially raised fears of another downturn. However, the market defied expectations, with nominal house prices increasing by 7.2% year-on-year in 2020 and 11.2% in 2021. This surge was driven by historically low interest rates, a shift in housing demand as people sought more space during lockdowns, and government stimulus measures. Construction activity also remained robust during this period, with a peak of 43,508 units started in 2021.

Despite this strong performance, the market began to show signs of cooling down by 2022. Rising interest rates, driven by global inflationary pressures and tighter monetary policies, started to dampen demand. Nominal house prices grew by just 0.6% year-on-year in 2022, and when adjusted for inflation, they actually declined by 7.9%.

While in 2023 house prices declined nominally by 0.9%, the market reversed course in 2024, ending the year on a positive note with a 3.9% year-on-year increase in Q4. This rebound was supported by a normalization of inflation levels and subsequent easing of monetary policy. Meanwhile, construction activity continued its downward trajectory, having slowed consistently since 2022. A 44.5% year-on-year drop in construction starts was recorded in 2023, followed by a further 41.6% decline in 2024.

20-year annual house price change (based on end-of-year house price index and consumer price index):

20-year construction activity dynamic (started and completed housing units):

Data Source: Statistics Denmark.

Demand Highlights:

Housing Transactions Rise Amid Interest Rate Reductions

Demand in Denmark's residential market remained robust in 2024. While Danish households have generally exercised caution in their overall spending, as highlighted in the December 2024 Economic Survey by the Ministry of Economic Affairs, this restraint has not extended to the housing market, where sales activity continued to benefit from interest rate reductions. According to Finans Danmark, a total of 63,779 residential units were sold during the year, representing an 8.63% increase compared to 2023.

Positive momentum was observed across all property segments. Sales of holiday homes recorded the strongest growth, rising by 12.19% year-on-year, followed by detached and terraced houses, which increased by 10.67%. In contrast, sales growth in the owner-occupied apartment segment was more modest at 1.21%, limited by constrained supply and the impact of the new housing tax reform that came into effect on January 1, 2024.

"Many opportunity purchases were realized before the introduction of the new housing taxes at the turn of the year 2023/2024, and thus it also took longer before sales [in the owner-occupied apartments segment] really got going in 2024. But the second half of the year in particular offered increased activity due to the prospect of lower interest rates and high employment," commented Birgit Daetz, communications director and housing economist at the real estate platform Boligsiden.

Data Source: Finans Danmark.

At the regional level, the Capital Region recorded the slowest growth in sales volumes, with below-average increases in transactions involving detached and terraced houses and holiday homes, and a 2.30% year-on-year decline in owner-occupied apartment sales. Experts attribute this trend to the limited and declining supply of properties available for sale in the region, as well as the effects of the introduction of the new tax system, though its adverse impact proved to be less pronounced than some had anticipated.

Number of dwellings sold by region:

The outlook for Denmark's housing market remains positive. The latest figures from Boligsiden as of April 2025 show an 8% year-on-year increase in home sales, marking the second-highest number of transactions since 2011, surpassed only by April 2021. Commenting on the figures, Birgit Daetz stated: "Although there is a lot of unrest in the world, the economic starting point in many private economies is good. Rising wages and solid savings have meant that many are well prepared to buy a home, and the figures show that many Danish families are also acting on that basis".

Supply Highlights:

Construction Slump Deepens, Yet Outlook Hints at Stabilization

Denmark's residential construction sector continues to lose momentum. According to Statistics Denmark, only 27,613 new housing units were completed across the country in 2024, marking a sharp 27.18% decline compared to 2023. Building permits fell by 24.17% year-on-year, while construction starts saw an even steeper drop of 41.55%. "Even though inflation now seems under control, the cost of residential newbuilding is at a record high. These conditions are translating into limited new supply," noted Colliers in their 2025 Denmark Market Report.

While completions stabilized in the first quarter of 2025, with a modest year-on-year increase of 0.47%, leading indicators such as construction starts and building permits remained subdued, falling by 48.78% and 28.27% respectively compared to the previous year.

Data Source: Statistics Denmark.

The decline in construction activity, observed across all regions of Denmark, has raised concerns among market participants regarding potential housing shortages, particularly in major urban centers. Data from Dagens Byggeri suggests that the Municipality of Copenhagen will need to add over 16,000 new homes by 2030 to accommodate projected population growth. Similarly, Aarhus will require approximately 10,500 additional units, while Aalborg will need around 5,500 new homes within the same period.

Residential construction dynamics by region:

Despite these challenges, experts maintain a cautiously optimistic outlook for the sector. Martin Kyed, Chief Economist at the Danish Forecast Centre, observes that with falling interest rates and stabilizing material costs, the downturn in construction likely reached its low point in 2024. He notes that "even if 2025 does not offer a significant recovery, at least new housing construction will not decline further."

Colliers experts also anticipate that conditions in 2025 may prove more favorable for increased development activity, particularly in areas with strong population growth and upward market trends, such as Greater Copenhagen. However, they caution that despite the recent decline in interest rates, both financing conditions and regulatory requirements are expected to remain restrictive, potentially limiting the number of new development projects.

Rental Market:

Growth in Rents and Yields Limited by Market Regulations

Recent data from Statistics Denmark shows that as of 2025, only 56% of Danish households own their homes, while the remaining 44% are renters. An analysis by Finans Danmark highlights the financial considerations behind these choices, revealing that in 45 of the country's 98 municipalities, the cost of living in an average owner-occupied home exceeds that of renting a comparable property. "The development in housing prices and interest rates on mortgages in recent years has meant that the number of municipalities where it is cheapest to own a home has decreased," explains Ane Arnth Jensen, Deputy Managing Director of Finans Danmark. "In larger cities and many areas of Zealand, renting is typically more affordable than owning a home."

Denmark's rent price index:

Data Source: OECD.

Despite interest rate cuts over the past year, the housing cost burden for owner-occupiers remains elevated, primarily due to rising home prices. With the monetary policy easing cycle now likely coming to an end, industry experts anticipate that rental housing will remain more economically attractive when comparing the costs of owning versus renting in 2025.

Under Danish law, tenant rents are strictly regulated, which has helped contain the growth of the Housing Rent Index even during periods of high inflation. According to Statistics Denmark, rents for all housing types rose by 7.1% over the three-year period from Q1 2022 to Q1 2025, with a year-on-year increase of 2.1%. Rents in privately owned housing accelerated at a slightly slower pace, increasing by 6.5% over the same three-year period (1.6% year-on-year).

Data Source: Statistics Denmark.

A joint analysis by Cushman & Wakefield in collaboration with ReData shows that the highest offering rates for residential leases last year were recorded in Copenhagen and the Greater Copenhagen area, averaging DKK 2,160 (USD 309) and DKK 1,800 (USD 257) per square meter per year, respectively. These areas also registered the highest year-on-year growth in rental prices. "The rental market in Copenhagen, in particular, performed well, where a high demand and a limited supply of rental apartments have pushed the rent levels upwards and shortened the average offering periods," commented Nicholas Thurø, Managing Partner at Cushman & Wakefield.

Offering rate for residential leases by submarket:

Research conducted by the Global Property Guide in June 2025 indicates that gross rental yields for residential properties in Denmark averaged 4.17%, virtually unchanged from 4.18% previously reported in July 2024. Yields varied regionally, with Aalborg offering the highest returns at 5.16%, followed by Aarhus (4.31%) and Copenhagen (3.05%).

Mortgage Market:

Lower Interest Rates Spur Lending Activity

In line with the European Central Bank's (ECB) decision in June 2025, the Nationalbanken also sanctioned cuts to its key interest rates: current-account and discount rates were lowered from 1.85% to 1.60%, and lending rates were lowered from 2.00% to 1.75%.

Denmark's mortgage loan interest rates:

Data Source: Nationalbankens Statbank.

With policy rates reaching their lowest levels in over two years after eight consecutive cuts, experts from Nordea, one of Denmark's leading mortgage providers, see this latest move as the end of the current easing cycle and don't expect any further decreases in the upcoming periods in their baseline forecast.

Data Source: Nationalbanken.

Along with the easing policy, the average interest rates on mortgage loans to households in Denmark have been decreasing. In April 2025, the average interest rate on new mortgages was reported by the Nationalbanken at 3.84% - 0.78 p.p. down since the same period last year and 1.65 p.p. down from the peak level observed in August 2023. For outstanding mortgages, the indicator peaked at the end of 2024 and has started to decline as well, reaching 3.34% in April 2025.

Local experts, however, warn that the impact of the prior rate elevation continues to unfold, as homeowners with loans originated during the extremely low-rate period pre-2022 will likely face substantial increases depending on when their loans need to be refinanced.

"It is positive that interest rates are now generally moving downward again and giving financial relief to many families. But not everyone will experience relief this year － some homeowners with longer interest rates are still facing increasing interest costs when they have to refinance," Niels Arne Dam, Chief Economist at Finans Danmark, commented earlier in 2025. 

Interest rates on mortgage loans to households:

Nonetheless, lower interest rates offered on new loans appear to have stimulated a rebound in lending activity after two years of subdued performance. In the first four months of 2025, the Nationalbanken reported DKK 125.8 billion (USD 18.9 billion) of new household mortgage business, which marked a 47.1% increase compared to the same period last year and a 26.0% increase compared to the same period in 2023.

According to Finance Danmark, the total number of loan offers (including residential and commercial properties) issued by mortgage banks between January and April 2025 was 65,069, a level 33.7% above the comparable period in 2024 and 4.1% above the comparable period in 2023, also indicating growing demand for credit.

"Despite rising house prices in the past year, we see no signs that buyers are holding back － quite the opposite. The Danish economy is strong, and many households have experienced noticeable wage increases. When combined with falling interest rates, this can help increase interest in home purchases," said Peter Jayaswal, Deputy Director for Realkredit, Property Financing, and Social Transformation at Finans Danmark.

In addition to mortgages from specialized lenders under the Danish mortgage model, DKK 35.6 billion (USD 5.4 billion) in other loans to households for house purchase were issued by commercial banks in the first four months of 2025, showing an increase of 11.2% compared to the same period in 2024.

Data Source: Nationalbanken.

In general, according to the most recent Eurostat figures, 48.4% of Danish households are homeowners with an outstanding mortgage or housing loan on the property. The total value of outstanding mortgage loans to households returned to growth in 2024, demonstrating a 0.5% year-on-year increase after two years of declines. As of April 2025, the nominal value of household mortgage stock stood at DKK 2.02 trillion (USD 303.7 billion), with 87.1% of those being loans on owner-occupied properties and summer cottages, 1.8% loans on private rental properties, and 11.1% loans on other property types.

The overall size of the mortgage market in the country (including mortgage loans to households and other domestic sectors) showed a 1.8% annual growth in 2024 and reached DKK 3.17 trillion (USD 476.9 billion) in April 2025. In relative terms, represented as a percentage of GDP at current prices, total outstanding mortgages continued to decline, dropping from an estimated 125.6% in 2014 to 105.8% in 2024.

Data Sources: Nationalbanken, Statistics Denmark.

Socio-Economic Context:

Economy Prepared to Withstand Global Trade-Related Uncertainties

After a post-pandemic 7.4% rebound in 2021 and a moderate 1.5% growth in 2022, Denmark's real GDP growth accelerated to 2.5% in 2023 and 3.7% in 2024. This dynamic was driven by strong exports of industrial production, especially in the pharmaceutical sector. According to the European Commission analysis, production-based economic expansion was particularly strong in the last quarter of 2024, creating a solid carry-over, with further growth expected thanks to the full reopening of natural gas extraction in the North Sea. The International Monetary Fund (IMF) currently expects growth to reach 2.9% in 2025, while the European Commission offers a more optimistic forecast of 3.6% growth in 2025.

At the same time, Consumer Price Index (CPI) inflation in the country has been increasing slightly from a low point reached in spring 2024, driven by higher energy and food inflation. In May 2025, Statistics Denmark reported inflation at 1.6%, which was above the annual level of 1.3% recorded in 2024. The outlook for price growth in the country is stable, however, supported by low non-energy industrial goods inflation and slowing wage growth, as noted by the European Commission. The indicator is expected to remain well under 2% in the upcoming periods, reaching annual levels of 1.6% in 2025 and 1.5% in 2026.

Data Source: IMF.

Contributing to its reputation as a wealthy and high-value-added economy, Denmark continues to maintain robust public finances. The country has been showing a budget surplus for several years in a row, most recently recorded at 4.5% of GDP in 2024 (the highest level in the EU) on the back of higher tax revenues from personal income tax, business tax, and pension yield tax. Denmark has also kept its gross debt ratio under the European Union's target threshold of 60% of GDP for over 20 years now. As reported by Statistics Denmark, in 2024, gross public debt sat at 31.1% of GDP, down from 33.6% the previous year and 34.1% two years ago.

In the upcoming periods, public debt is expected to decrease further to 29.7% in 2025 and 29.4% in 2026. Slightly higher unemployment, as well as higher government expenditures, notably in the military sector, are projected to reduce the general government surplus to 1.5% of GDP in 2025 and 0.6% of GDP in 2026.

In the country's labor market, a slowdown is underway, with notably weaker employment growth anticipated this year compared to previous years, according to the European Commission assessment. In parallel, unemployment is expected to continue rising against the background of higher participation of older workers and international labor in the labor force. The seasonally adjusted ILO unemployment rate has been trending upwards since 2022, most recently reported by Statistics Denmark at 6.9% in April 2025, up from 5.9% a year ago and 4.9% two years ago.

Data Source: Statistics Denmark.

Overall, the Danish economy is expected to demonstrate resilience in the coming years despite the challenges currently presented by global trade tensions. "The trade war is definitely bad news for economic activity in Denmark," summarized a recent economic outlook from Nordea. "However, it comes at a time when the Danish economy is exceptionally well prepared to handle the wave of uncertainty flowing across its borders. This is mainly due to a substantial savings surplus, solid public finances, and a flexible labor market. Combined, this makes Denmark well prepared to handle the new global trends."

Within the previous two quarters, all three major rating agencies affirmed Denmark's 'AAA' standing with a stable outlook.

Sources:

1. Statistics Denmark
   1. Residents: https://www.dst.dk/
   2. Construction Activity: https://www.dst.dk/
   3. Sales of Real Property: https://www.dst.dk/
   4. Rent Indices: https://www.dst.dk/
   5. Key Figures for the National Accounts (GDP): https://www.dst.dk/
   6. Labor Force Survey (LFS): https://www.dst.dk/
   7. Consumer Price Index: https://www.dst.dk/
   8. EMU debt and EMU balance: https://www.dst.dk/
2. Danmarks Nationalbank (Nationalbanken)
   1. Official Interest Rates: https://www.nationalbanken.dk/
   2. Lending: https://www.nationalbanken.dk/
3. Ministry of Economic Affairs, Denmark
   1. Economic Survey, December 2024: https://en.oem.dk/
4. Association of Danish Mortgage Banks (Finans Denmark)
   1. Housing Statistics: https://finansdanmark.dk/
   2. In More and More Municipalities, It Has Become More Expensive to Own Than to Rent a Home (DK): https://finansdanmark.dk/
   3. Interest Rate Cuts Give Many Homeowners Financial Relief － But Challenges Await Some (DK): https://finansdanmark.dk/
   4. Copenhagen Home Buyers are Increasingly Obtaining Loan Offers (DK): https://finansdanmark.dk/
5. European Commission
   1. Economic Forecast for Denmark: https://economy-finance.ec.europa.eu/
   2. Distribution of Population by Tenure Status, Type of Household and Income group: https://ec.europa.eu/
6. International Monetary Fund
   1. Country Overview: Denmark: https://www.imf.org/
7. Fitch Ratings
   1. Fitch Affirms Denmark at 'AAA'; Outlook Stable: https://www.fitchratings.com/
8. S&P
   1. Denmark 'AAA/A-1+' Ratings Affirmed; Outlook Stable: https://disclosure.spglobal.com/
9. Moody's
   1. Moody's Affirms the Aaa Ratings of Denmark: https://ratings.moodys.com/
10. Colliers
    1. Colliers Denmark Market Report 2025: https://colliers.cld.bz/
11. Cushman & Wakefield
    1. RED Danish Investment Atlas 2025: https://issuu.com/
12. Boligsiden
    1. Home Sales Continue at a High Pace: Second Most Home Transactions in April (DK): https://www.boligsiden.dk/
    2. Sales Prices Set Records in All Parts of the Housing Market (DK): https://www.boligsiden.dk/
    3. New figures: Home Prices Continue to Rise, While Discounts and Sales Times Decrease (DK): https://www.boligsiden.dk/
    4. Growth in Housing Sales for Houses, Apartments and Summer Homes in 2024 (DK): https://www.boligsiden.dk/
    5. The Supply of Housing is Decreasing - Especially in the Capital Area: https://www.boligsiden.dk/
13. Nordea Bank
    1. Denmark's Economic Outlook: Continued Progress https://www.nordea.com/
    2. The Last Interest Rate Cut from the Danish Central Bank?: https://corporate.nordea.com/
    3. Denmark's Economic Outlook: Well Prepared: https://www.nordea.com/
14. Dagens Bygger
    1. A Decline in Housing Construction Will Lead to an Increased Housing Shortage in 2030 (DK): https://dagensbyggeri.dk/
    2. Construction Activity in Europe to Increase In 2025 - But Large Markets Drag Down Growth (DK): https://dagensbyggeri.dk/