House Prices Spike in Affluent Suburbs

28-07-2010 17:33 While most of the nation’s housing market remains relatively flat, property prices in the sought-after region north of Copenhagen are increasing at a substantial rate. The price rises are so sizable that one expert is suggesting that a new housing bubble could be forming.

Both the Danish Mortgage Federation and the Association of Danish Mortgage Banks
have confirmed that municipalities north of Copenhagen experienced price increases of around 15 percent in the second quarter of 2010 compared with the corresponding period last year. In the suburb of Horsholm, houses are being sold at levels that are almost 30 percent above 2009 levels,

However, away from the capital, other regions are experiencing stagnant or falling prices. The cost of an average Danish family home rose by 1.5 per cent over the past year.

According to the website business.dk, housing expert Jens Lunde is warning observers not attach too much significance to the regional price fluctuations, which he says are partly the result of low interest rates and expansionary fiscal policies.

" As long as interest rates remain low, prices will rise” he says, “which means we could have a temporary bubble [in certain areas]. When interest rates fall, prices will come down again”.