Fitch Ratings forecasts nominal home prices in Denmark to decrease by up to 10% in 2023 leading to an overall decline of 10-15% from the peak in June 2022 (following a 20% increase from 2020 to mid-2022).

The price falls will result from higher mortgage rates and squeezed discretionary income. Flats in Copenhagen, which experienced the highest increase in recent years, will face the largest decline. ‘We expect prices to bottom out in 2024, when the impact from inflation and rates should ease. The surge in the long-term mortgage rates from 2% at the start of 2022 to 5% in October and high inflation (8% in October) have led to a lower demand for home purchases.’

The firm added that lower expected inflation in 2024, together with higher wages and a reduction in mortgage rates should stabilise home prices. However, it still expects prices to marginally decrease in 2024, notably due to new housing taxation rules coming into effect then. The tax, which will fluctuate with property values, will mostly affect high value properties.