Rising interest rates and speculation that prices had topped were not enough to slow down the housing market in 2005. Prices nationwide are expected to rise by as much as 20 percent, one of the biggest increases ever in the Danish housing market.
Annual figures from the Association of Mortgage Lenders will not be available until later this month, but according to initial numbers from mortgage lender BRFkredit and real estate agent Home, prices in the third quarter rose 17.8 percent compared to the third quarter of 2004.
Real estate experts note that the number of houses on the market has been falling since the middle of 2003. With demand outstripping the supply of houses on the market, the effect of interest rate hikes has been all but counteracted.
'There isn't anything that indicates price increases are slowing down,' Thomas Torp, head economist for the national association of real estate agents, said to daily newspaper Politiken. 'That can be seen partly in the short supply. All this talk about increasing interest rates is nothing that has not stopped buyers yet.'
Major price increases in Copenhagen and Århus have led families to move to outlying areas, according to Ulrikke Ekelund, head economist for BRFkredit.
'As prices increase close to the capital region, more and more families move one step farther away to areas where houses can still be purchased relatively cheaply,' said Ekelund. 'At the same time, there are a lot of lovely areas close to the water, which are some of the most sought after properties on the real estate market right now.'
According to Home's figures, the average price of a 150 sq. metre home in Copenhagen County in November was DKK 4,443,000. The price in neighbouring Roskilde County for the same size house was DKK 2,750,000.
The average price of a house in Århus County is just under DKK 2,000,000, while in neighbouring Vejle County, the price was DKK 1,725,000.
The average national price in November was DKK 1,867,000.
Real estate agents say the market cannot expect prices to continue to rise at the same rate in 2006, but they do foresee modest increases.
'The major party has ended, and the little party has begun. We think that the rate of increases will drop from 20 percent to under 10 percent this year,' said Preben Angelo, head of communication for Home.