Danish house prices plunged in the first quarter to a seven-year low after sellers slashed values to unload properties that had been on the market for a record-high number of days.
The average price per square meter fell to 10,897 kroner ($1,857) in the first three months, down 7.4 percent from 11,769 kroner a year earlier, according to data released today by the Copenhagen-based Association of Danish Mortgage Banks and the Mortgage Bankers Federation. The average time on the market before a sale reached 230 days, the highest since the association began collecting the data in 2004.
The Nordic country’s housing market stalled after a real estate bubble burst, triggering a regional banking crisis and helping tip the economy into a recession last year. Central bank Governor Nils Bernstein has warned the market may be in a negative spiral, with expectations of reductions driving prices further down.
“There’s an increasing risk that potential buyers will continue to hold back and postpone a decision to buy a home,” said Christian Heinig, chief economist at Realkredit Danmark, in an e-mailed note to investors, citing worsening economic data and the escalating European debt crisis.