Colliers København Delrapport 2023 UK

what averse to forward-funding transactions, a model that had otherwise been gaining ground in recent years, helping mainly less financially strong developers to realise their de velopment projects. The market outlook for 2023 comes with some uncertainty; however, if inflation is reined in and interest rates drop, we expect the sizeable amount of available capital – currently waiting on the sidelines – to be deployed. Record-high inflation, a sharp increase in financing costs and uncertain market prospects have combined to put an end to the good times in the ownership housing market. However, the drop in prices comes on the heels of a couple of years with explosive price hikes outgrowing real income hikes, causing the ranks of prospective homebuyers to grad ually shrink due to affordability issues. This phenomenon has been most pronounced in Copenhagen, which is hardly The party is over in the ownership housing market

surprising, all the while that this city has witnessed the steepest price hikes, regardless of the fact that it generally commanded the highest prices to begin with. Ownership housing prices did not drop until Q3 2022, al though interest rates had already seen a sharp increase in Q2 2022. Despite the decline in ownership prices, prospec tive buyers are not better off than last year, as the rise in financing costs has greatly eclipsed the current decline in prices. This applies mainly to first-time homebuyers, as existing owners are facing a much higher housing burden along with additional limits for a potential relocation. Furthermore, 2022 saw record-high hikes in utility charges, further exacerbating the financial pressure on homeown ers. In 2023, prices are expected to see a sustained down trend in Copenhagen, which is to be viewed in the context of the drop in Danish households’ real wages, sustained high financing costs and heightened caution. So far, this is reflected in longer resale periods and, by extension, an in crease in supply.

-2.7%

Realised sales prices

43%

18%

Units for sale

Laydays

Note : Development between Q3 2021 and Q3 2022, ow ner-occupied apartments, City of Copenhagen. Source : Colliers, Finance Denmark.