Denmark Property Prices Set for Further Falls
22 September 2011
Experts on the Danish market have stated that property in the country, could be up to 25% overvalued, as they predicted that prices would continue to fall. Denmark has not escaped the global property crash, with prices falling 16% since the 2007 peak and over a dozen lenders going belly up. But according to the recent reports, the low prices are not luring buyers, property is still well overvalued, and more falls are to come.
In the second quarter of this year prices fell by 3.2% as the number of properties for sale reached a record high. Experts think property prices could drop by around 5% this year, by 2% next year, and that prices will only gradually increase after that.
The new government -- elected last week -- has pledged to spend more on welfare and put forward proposals to suspend some property taxes, in an effort to revive the property market. There are worries that failure to do so could hold back the recovery of the Danish economy, which is highly dependent on the housing market.
The latest predictions are for a 1.25% growth in the economy this year, up from earlier forecasts of a 2% decline. The country is still suffering from the effects of the housing bubble, which destroyed a lot of housing wealth. Consumer spending is still suffering for this, as Danes save to recoup their lost wealth., A recent survey showed that more than half of Danish consumers would use any extra income to pay off debt first and then to save.