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COVID-19 has led to rising house prices throughout the Nordic region

New research from Danske Bank shows that house prices have risen across the Nordic region despite the pandemic and economic uncertainty.

Danes have not been the only ones active in the housing market during the corona crisis. Our Nordic neighbours have also been on the hunt for new houses, apartments and vacation homes, and that has resulted in substantial price increases in Denmark, Sweden, Norway and Finland.

Price increases

Average price increases between December 2019 and April 2021

18 %
15,7 %
11,4 %
4,9 %

Denmark and Sweden top the league in terms of price growth, while Finland has experienced more modest price rises. 

In the case of Sweden, the increase comes in an already very expensive market. Prices here have risen by 18 per cent, on average, between December 2019 and April 2021. In Denmark, prices had increased by 15.7 per cent, 17.9 per cent and 26.4 per cent on houses, apartments and vacation homes, respectively, when measured in May. In Norway, prices were up 11.4 per cent in May 2021 compared with May 2020, while Finland saw more limited increases, with square metre prices growing 4.9 per cent.

The overall picture is a red-hot Nordic housing market.

Las Olsen

Chief economist at Danske Bank

Unusual development
Common to all the Nordic countries is a growing interest in larger homes due to the lockdowns, though greater purchasing power as a result of low interest rates also plays a role. Yet, prices rising so dramatically was a surprise, notes Las Olsen, chief economist at Danske Bank.

“Historically speaking, pronounced price increases during a time of great economic uncertainty is a very unusual trend. This was the case for all four countries, as buying a home was high on the agenda across Denmark, Norway, Sweden and Finland. Naturally, there are regional differences, but the overall picture is of a red-hot Nordic housing market,” he says.

While prices have risen very substantially, Danske Bank’s research also shows there is still room for first-time buyers in several of the Nordic countries, though they will probably have to look for a home outside the capital cities. In Denmark, the so-called housing burden is low in historical terms, while Sweden, too, offers better opportunities for first-time buyers – if they plan to live outside the three largest cities, that is. In Norway, the situation is under pressure due to a low supply of dwellings combined with relatively low construction activity ahead of the crisis.

Price boom fading
Despite prices rising across the Nordic countries, the research also reveals that the dramatic price increases are fading. Unsurprisingly, this is because life is beginning to return to normal and so there are opportunities to spend money on other things than housing, though talk of the authorities intervening in the housing market has also contributed.

“New regulation is being debated in all four countries. Some are asking the authorities to intervene to reduce the debt of homebuyers and also the systemic risk, while others prefer to wait and see. No interventionist measures have been decided as yet, but this is certainly something that could influence developments in all four countries,” says Las Olsen.