Colliers Denmark Market Report 2024

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RESIDENTIAL - COLLIERS MARKET REPORT 2024

HOTEL INDUSTRIAL & LOGISTICS RETAIL RESIDENTIAL OFFICE

partly because rising house prices mean that the down pay ment must be correspondingly higher. Against this back ground, we expect a higher age for first-time buyers. Historically, an increased housing burden for owner-oc cupied homes has often resulted in a movement towards rental housing, and this trend is currently being reinforced by the fact that even financially well-off Danes are placing greater emphasis on the flexibility that rental housing can provide. Overall, we expect the demand for rental housing to continue to increase in the future. We also expect real rent increases in the coming years in Greater Copenhagen, driven by high demand and stagnating supply due to declin ing new construction. However, this does not apply to Aarhus and other growth cities, as a relatively large num ber of homes have been built, which the market must first absorb, resulting in lower vacancy rates, before rent levels can rise significantly. Prices for owner-occupied homes gen erally fell in the first half of 2023 but rose in the second half. The increase can to some extent be explained by new prop

erty valuations and new tax rules as from January 2024. Many buyers wanted to buy a new home before the turn of the year, so they could freeze their property tax in principle for many years to come. The changes have also increased the supply of owner-occupied homes because poten tial sellers have seen the possibility of a better sales price before the turn of the year and because buyers are willing to pay extra to get several years of tax rebates. Conversely, it is likely that well into 2024 there will be fewer transactions – because a large relocation need is covered by the end of 2023 – and lower prices because property taxes are not fro zen for new buyers. Banks expect interest rates to have peaked and that inter est rates are likely to fall in the coming years. However, it is also expected that interest rates are unlikely to reach the historically low levels of previous years. If this holds true, it could put pressure on prices for owner-occupied homes, as the interest rate hikes in 2022 and 2023 so far do not seem to be fully priced in.

Rising homeowners’ cost burden in major cities working in favour of renting

Ultimo

Ultimo

Year-end 21 Copenhagen 1

22

23 Year-end 21

22

23

Horsens

A B

53% 62% 68% A 37% 38% 38% B

27% 38% 36% 31% 32% 31%

Aarhus

Vejle

A B

48% 56% 58% A 31% 32% 31% B

28% 35% 37% 30% 30% 30%

Note: The rental housing burden indicates the share of rent in relation to income, while the owner-occupied housing burden indicates the share of owner-occupied housing costs in relation to income. Income here is based on the average disposable household income for residents of terraced houses and flats built after 1992. Rent levels are based on average considera tions for residential rental properties subject to open market rent. The resale price is also based on average considerations. The calculations are based on a home with an area of 80 sq m. An annuity loan with 80% mortgage and 10% bank loan is assumed. The calcu lation of the burden of home ownership includes the amount of instalments and takes into account mainte nance and ownership costs. Source: Finance Denmark, Danmarks Nationalbank, Statistics Denmark, Colliers A. Owner-occupied housing burden B. Rental housing burden

Odense

Kolding

A B

36% 39% 42% A 32% 32% 31% B

27% 34% 34% 30% 30% 30%

Aalborg

Roskilde

A B

32% 40% 40% A 29% 30% 30% B

38% 44% 47% 34% 34% 35%

Silkeborg

Randers

A B

32% 44% 41% A 31% 32% 31% B

22% 23% 22% 31% 31% 31%

Note: Selected cities, Denmark. 1 Including Frederiksberg.