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Everything you need to know is included in our Denmark Property Pack
Are you considering buying real estate in the land of Vikings? Are you questioning if it's a good idea to buy now or if it's better to wait until next year?
People have differing viewpoints when it comes to market timing. The Danish real estate agent you know might advise you that now is the opportune time to buy property, while your childhood friend from Copenhagen may suggest exercising more patience before making a decision.
At Investropa, when we create articles or update our pack of documents related to the real estate market in Denmark, we trust facts and data, not opinions or rumors.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Denmark.
Enjoy the article!
How is the property market in Denmark now?
Denmark is, today, one of the most stable countries in the world
Positive
Stability should be the leading criterion when choosing a country for real estate investments. It is an information you need as a foreigner looking to buy real estate in Denmark.
You probably already know that Denmark is incredibly stable. The last Fragile State Index reported for this country is 15.9, which extremely high.
Denmark's stability is largely attributed to its robust welfare state, which ensures comprehensive social services and a high standard of living, reducing economic disparities and fostering social cohesion. Additionally, its strong democratic institutions and low levels of corruption contribute to effective governance and public trust, further enhancing national stability.
Investors can definitely rely on the country's stability for investment. Let's review the economic outlook.
Denmark will grow at a moderate pace
Positive
Evaluate the country's economic condition before deciding to invest in property.
As projected by the IMF, Denmark will, in 2024, grow by 2.1%, which indicates the country is heaidng in the right direction. As for 2025, the consensus estimate is 1.5%.
On the longer term, the growth will still be there since Denmark's economy is expected to increase by 7.6% during the next 5 years, resulting in an average GDP growth rate of 1.5%.
A moderate growth rate in Denmark suggests a stable and predictable property market, reducing the risk of sudden price drops and making it a safer investment. Additionally, steady growth can lead to consistent returns over time, making it an attractive option for long-term investors.
On top of that, there are other indicators to pay attention to.
Danish business owners are steadily increasing their trust in the economy
Positive
The GDP forecast is not enough to fully capture the local sentiment, as it relies solely on external projections and may overlook important factors. Thankfully, in Denmark there is an official metric that is frequently communicated. We're lucky because this isn't true for every country.
The Business Consumer Index (BCI) is a measurement that captures the confidence of business leaders in both the current and future economic conditions. Surveys and assessments are utilized to determine this index.
According to the Statistics Denmark's data, the latest Business Confidence Index value is 3 for Denmark. It is definitely a small score.
If we look at the data, however, we can see some positive signs. It's going up: the BCI score, 12 months ago, was -7.
In Denmark, the Business Confidence Index is currently at a minimal level. However, this does not necessarily indicate an impending crash in the property market. A minimal confidence score often reflects a temporary phase of uncertainty or caution within the business sector, which is a typical aspect of economic cycles. Therefore, it is crucial to evaluate other key indicators before deciding if it is the right time to invest in property in Denmark. Fortunately, we have more information to share with you.
Denmark’s property market: growth, stability, and price decline
Positive
Denmark's home prices have increased by 17.0% in 5 years according to eurostat.
It means that if you had bought an apartment in Copenhagen for $500,000 five years ago, then it would now be worth around $585,000.
Recently, the property market has witnessed a transition from a period of growth to stability, followed by a decline in prices.
The drop we're seeing in property prices in Denmark is not necessarily a negative signal. Instead, it could indicate a market correction that presents an opportunity to invest in Danish properties at discounted prices.
You can find a more detailed analysis of the real estate prices in our property pack for Denmark.
Everything you need to know is included in our Denmark Property Pack
Denmark's population is growing and getting richer
Positive
Take population growth and GDP per capita into consideration before you decide to invest in real estate because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Denmark, the average GDP per capita has changed by 6.3% over the last 5 years. It's a solid number. Furthermore, the Danish population is growing (+3% in 5 years).
This means that, if you purchase a modern apartment in Copenhagen and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is predicted to increase in Danish cities such as Copenhagen, Aarhus, or Odense in 2025.
Rental yields are not crazy in Denmark
Neutral
Let's now turn our attention to the rental yield.
It's the annual rental income of a property divided by its price. For example, if a property in Denmark is purchased for 2,000,000 DKK and generates 100,000 DKK in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Denmark offer gross rental yields ranging from 2.9% and 5.6%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Denmark.
It means that the income potential from a real estate investment is relatively moderate.
Everything you need to know is included in our Denmark Property Pack
In Denmark, inflation is expected to be minimal
Neutral
In two words, inflation is when money devalues.
It's when your favorite cup of Danish coffee in Copenhagen costs 30 Danish kroner instead of 25 Danish kroner a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
As per the IMF's forecasts, over the next 5 years, Denmark will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Denmark will likely experience almost no inflation. If you buy a property now, you may experience lower appreciation potential and reduced returns on investment.
Is it a good time to buy real estate in Denmark then?
Time to conclude !
Denmark is renowned for its stability, making it one of the most reliable countries in the world to invest in. This stability extends to its property market, which is characterized by a moderate growth rate. With the Danish economy projected to grow by 7.6% over the next five years, averaging a GDP growth rate of 1.5%, the environment is ripe for property investment. This steady economic growth suggests that the property market will remain predictable, reducing the risk of sudden price drops and providing a safer investment landscape.
Investing in Denmark's property market in 2025 is particularly appealing due to its combination of growth and stability. The moderate growth rate ensures that property values are likely to increase steadily, offering consistent returns over time. This makes Denmark an attractive option for long-term investors who are looking for a reliable market with minimal volatility. The potential for steady appreciation in property values, coupled with the country's economic stability, makes it a compelling choice for those looking to invest in real estate.
Moreover, Denmark's population is on the rise, and with it, the wealth of its residents. As the population grows and becomes more affluent, the demand for housing is likely to increase, further supporting property values. This demographic trend, combined with the country's stable economic outlook, suggests that the property market will continue to thrive, providing a solid foundation for investment. The growing population and increasing wealth create a favorable environment for property investors, ensuring a robust market for years to come.
Additionally, rental properties in Denmark offer attractive gross rental yields, ranging from 2.9% to 5.6%, according to Numbeo. This makes Denmark an appealing destination for those looking to generate rental income from their property investments. Furthermore, with inflation expected to remain minimal, the purchasing power of rental income is likely to be preserved, enhancing the overall return on investment. All these factors combined make 2025 an excellent time to consider buying property in Denmark, offering both stability and potential for growth.
We genuinely hope this article has provided you with helpful information.. If you need to know more, you can check our our pack of documents related to the real estate market in Denmark.
-Will real estate prices go up in Denmark?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.