Danish Apartment Prices Are Rising Too Fast, Danske Bank Says

Danish apartment prices are rising at a pace that may be unsustainable, according to Danske Bank A/S, the nation’s biggest lender.

Apartment prices rose 2.5 percent in May from April, and 12.4 percent from a year earlier, according to data published today by Copenhagen-based Statistics Denmark.

“Such a high price rise can’t be justified on the back of the economic development,” Steen Bocian, chief economist at Danske, said in a note. “At this point, we’re not looking at a bubble in the apartment market, but if the development continues in the coming quarters, there’s a considerable risk.”

Denmark’s $355 billion economy has struggled to surface from its latest housing bubble which burst in 2008, wiping about 20 percent off property values in the slump that followed. Danes, who carry the world’s biggest private debt burden relative to disposable incomes, have been reluctant to spend on concern the housing market could fall further.

“One or two years ago, buyers feared more price falls and held back,” Bocian said. Today’s data suggest that “expectations for future price developments have changed as the turnaround in the housing market has taken hold,” he said.

House prices rose 0.5 percent in May from the month earlier, and gained 3.9 percent from a year earlier, the statistics office’s data show.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.