Investment Ideas / Rental vs owned property in Denmark

This article is analysis of Danmark housing model - Rental vs Owned property in numbers.

Rented apartments

The average rent per square meter in 2012 was approximately DKK 1,000 (EUR 134) in Copenhagen (and Aarhus). In general, approximately 29% of disposable income is used to pay housing expenses. According to Housing statistics in the European Union 2010 housing consumption as a share of total household consumption in Denmark was 25.4 percent (1980), 26.1 per cent (1990) and 26.6 per cent (2000). No more recent figures are available.

The share of rental dwellings is relatively high in Denmark compared with other OECD countries, but Danish rental housing (both private and social) is subject to rent regulation and also receives more direct/indirect public subsidies than owner-occupied housing.

Owned apartments

One in every five housing units in Copenhagen is owner-occupied. While the price of owner-occupied flats dropped by approx. 30% from 2006 to 2009, the prices have been rising over the past few years. The price level at the beginning of 2014 resembles that of 2005. Particularly from 2012 onwards, the price of owner-occupied housing has risen by 19 percentage points. In contrast, prices nationwide have not risen, and are in fact still falling in several parts of the country. It should be noted that the sale of new, and thus more expensive units, may have influenced price trends so that the price of ’old’ housing units has not risen quite as much.

dk house price index Source: Boligmarkedsstatistikken dk apartment prices Source: Boligmarkedsstatistikken

Cooperative apartments

In addition to conventional home ownership, Denmark has private co-operative ownership (andelsboliger in Danish) where owners buy a ‘society owner share’ from the former owner of the dwelling (most often an apartment), and pay the owner society a comparatively low rent for the right of occupation. The price of the society owner share is set according to rules that keep the share price growing over the years, but usually below the market price. The monthly rent covers, among other expenditures, debt servicing and exterior maintenance. When owners want to leave and sell their share, they are free to do this, but potential buyers must – in some cases may – be taken from a waiting list. The board is elected by the shareholders/owners of the co-operative. The legal relationship between the cooperative housing association and the individual shareowner is regulated by the association’s articles of association and not by the rent legislation.
In 2010 there were 202,000 co-operative ownerships in Denmark in approximately 10,000 co-operative associations. This equals approximately 7.4 per cent of the total dwelling stock.
A regulation on condominiums was introduced in 1965 after thorough debate in the Parliament from 1962 onwards. During the years the types of building where it might be possible to establish condominiums have been restricted. This was done because it was found that converting rented dwellings into condominiums would decrease the number of affordable rented dwellings for those in need. The regulation still exists.

dk cooperative housing Source:


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