Many people in Denmark are looking for expert advice regarding the choice of an actual property to purchase. It’s not a secret that the real estate market has begun to alter due to a combination of high prices and strong demand for several months.
While apartment prices are expected to drop, people still can not be sure if it is the right time to purchase any property in Denmark. The outbreak of coronavirus became the key reason for such a tendency. Correspondingly, people’s needs have changed, and they did nothing but continue spending time staying at home using the special relief packages provided by the government.
Two more factors have influenced the general property prices and rates greatly, making people hesitate. Namely, the gas price rise and the war, including the inflation rates, caused considerable changes in real estate. At first, the market worked well until interest rates were raised in March 2022. Come the middle of summer, people noticed that the property price had moved down visibly. That applied to both houses and apartments. By the way, the most tangible fall was observed in the area around Copenhagen.
If you want to buy a house in Denmark or, namely, in Copenhagen, you need to know more about the interest rate and price changes. According to the statistics, house prices dropped by 0.4 percent, as long as prices for apartments fell by 0.9 percent. Talking about the landslide of prices in the capital of Denmark, you will discover the actual drop of 2 percent. The related experts find the following process as a normal cycle when a wide array of properties for sale reduces, and interest rates are on the rise.
Any Expected Changes in the Property Market?
Will property prices continue to go down, and what should the potential lessee know about it? This is a question of current interest around the topic of the property market.
Mira Lie Nielsen, who is considered one of the best housing economists at Nykredit, says that in the next year and a half, we will continue to observe up to a 10 percent fall in house prices in the country. Speaking about the capital area, the rate can drop here by 15 percent or even more. Regardless of the type of property: whether it is a house or an apartment, the price will vary greatly as well.
What to do or Should I Invest Money in the Property I Want?
According to the recommendations of one more reliable real estate economist in Denmark, it is better to buy a property in case your family members, indeed, need it and not rely on unclear expectations and possible changes in the housing market. It is definitely not about the property market if you want to speculate with your funds. You can earn in such a way if to make some deals on other markets but not on this one.
They say that housing prices will drop over some time, so it’ll be reasonable to wait a little bit if you have any good place for temporary living and know the eligible time for buying will come soon. It’s not actually about the value decreasing. It is more about speculation, which is not good in this case. If you remember the start of the Covid period in 2020, a lot of us were expecting that property prices would fall, and the final figures just shocked everyone; on the contrary, high prices.
What are the Reasons for the Decline in property Prices?
Today the buyer’s economy continues to suffer from a lot of pressure created by a considerably high rate of inflation and heavy interest rates. Moreover, new property tax rules that are going to be implemented in 2024 also have an impact on the price drop in the apartment market. According to these new rules, there will be included two more property taxes, starting in 2024, that are connected with property valuation and the value of the land.
If to analyze the following changes, you will discover that apartments can get a tax boost with a high probability under these new policies. It can happen because the land under apartments has been depreciated over a long period of time. Consequently, it will lead to a housing tax increase.
It is planned that the owners of the existing homes receive a tax subsidy for their property while new buyers will be required to pay the heavier housing taxation rate. Probably, this is the reason why the prices for apartments in Denmark continue to go down, and potential buyers know this and carefully evaluate the situation.
Should I Wait, or Is the Price Worth of Purchase?
People, as buyers, are usually expecting to find affordable prices after some time of waiting, and they do believe it will happen in the future. But are the costs worth buying the property? The costs are different if to talk about buying and selling a home in the country and, finally, your alternative variant – renting a flat or a house in the area you like the most – can change everything and become a winning choice.
Typically, the buying process requires an extra 4-5 percent of the price of the property. Remember about the registration fee that a new owner must pay to the state as well as a certain percent of the purchasing price. Dealing with banks, you will also need to pay additional costs connected with the mortgage deed registration.
When it comes to property selling, do not forget about 3-4 percent, which are the additional costs linked with the property value. So you should clearly understand that moving house is usually an important and comprehensive decision both in terms of finances and your own attitude to the whole process.
