A devalue in real estate is forcing some homeowners to stay put
The housing market is still in such a slump that if put up for sale, every third apartment in Copenhagen would be selling at a loss, according to calculations from Nordea Bank.
The capital is seen as a barometer for property values elsewhere and sellers nationwide are holding out in the hope that if prices start to increase in Copenhagen, the rest of the country will follow.
But in the meantime, thousands of properties in the capital that were purchased at highly inflated prices over the last few years have lost an incredible amount of value in the last year.Politiken newspaper reports that 32 percent of apartments in the greater Copenhagen area have dropped in value below their original purchase price, while the same is true for 11 percent of detached houses.
On a nationwide scale, recent property purchases facing a loss amount to 22 percent of apartments and eight percent of detached homes.
Up to 170,000 properties across the country would now sell at a loss compared to their original purchase prices – the highest figure since the housing crisis of the 80s - and an increase of 70,000 homes in the last six months.The situation in Copenhagen is so bad, that property economist Troels Theill Eriksen of Nordea said many have run out of options.
‘A lot of Copenhageners are now stuck in a frozen situation where they simply just can’t afford to sell,’ said Eriksen.
The situation may be responsible for the current baby boom affecting the city as parents cannot afford to sell their city apartment and move to a house in the country.
‘Many families are staying put instead of the previous trend of them moving out of the city. Some choose to stay here, but there are also those who have to stay because of the financial crisis,’ said Malene Stampe of the city council.
Copenhagen Council was caught napping by the boom, when it was discovered at the start of the year that there were an 1,600 more children under the age of five than had been estimated for in the budget.
The boom has resulted in record long waiting lists for daycare, schools and after school programmes. Sortedam School in the Østerbro district is already seeing the direct effects of the trend.
‘The school normally has three classes for every year group, but last year we had to add an extra class for the youngest students and we can already see that the intake is growing so rapidly that we’ll need five classes next year,’ said Anne Lindegaard of the school.
The council is currently working to accommodate the extra children and figures from April showing almost 39,000 children under the age of five means that 2,000 extra daycare places will be needed next year.