Denmark’s House Prices Rose Last Quarter Amid Record-Low Rates
Danish property prices rose for the first time in two years, adding to signs that the Nordic country is emerging from its housing crisis, as record-low interest rates feed demand for mortgages.
House prices rose in the second quarter by 0.9 percent from the three months through March to 11,057 kroner ($1,944) per square meter, the Association of Danish Mortgage Banks said today on its website. The number of days on the market until a sale declined 4.4 percent, it said.
Denmark’s housing bubble burst more than four years ago, plunging the economy into a recession and triggering a regional banking crisis. House prices had slumped 25 percent since their 2007 peak, and will on average sink 3.5 percent in 2012, the government estimates.
Central bank Governor Nils Bernstein warned earlier this year that Denmark’s housing market was oversold as buyers held off in anticipation of further prices declines. Today’s data suggest such speculation has ended.
“With the trends seen in the new numbers, there’s light again at the end of the tunnel,” Niels Storm Stenbaek, chief economist at the Danish Bankers Association, said in an e-mail. “The housing market is now turning.”
Danske Bank A/S (DANSKE), Denmark’s biggest lender and the owner of the country’s second-largest mortgage bank Realkredit Danmark A/S, rose as much as 1.3 percent and traded 0.5 percent higher at 112.60 kroner as of 10:17 a.m. in Copenhagen. The move made Danske the biggest gainer on Denmark’s benchmark OMXC20 index after Vestas Wind Systems A/S.
On an annual basis, prices fell 6.4 percent, while the number of days until a sale increased 13 percent, the Copenhagen-based association said.
Danish mortgage rates are at record lows as investors fleeing Europe’s debt crisis turned to the Nordic country, which is backed by a AAA credit rating. Yields on Nordea Bank AB (NDA)’s one-year bonds mortgage sold to fund adjustable rate 30-year loans fell to 0.35 percent in refinancing auctions that ended earlier this month.
The figures are the best indication “in a long time” that a recovery is under way, Nordea said today in a note.