5 Factors That Affect House Prices in Denmark
Price is important in every purchase decision and even more so when you are dealing with real estate sold at 7-digit prices (and sometimes even more). Many elements determine the house prices in Denmark; however, we have narrowed them down to five critical factors. Note that these five factors don’t uniquely affect Copenhagen house prices but real estate prices in Denmark in general.
1. The location
Location, location, location. One of the most, if not the most important price determinator. Real estate prices are usually higher in urban than rural areas. Roughly speaking, the further you are away from Copenhagen, the lower the real estate prices – except in larger cities like Aarhus, Odense and Aalborg.
Properties in cities surrounding Copenhagen i.e. Roskilde, Køge, Hillerød etc., are relatively high-priced, but that is to expect when you are this close to the capital. The prices, however, are still lower than actual Copenhagen property prices. For a description of the different districts of Copenhagen, read our previous article about what to consider when wanting to buy a house in the Danish capital.
2. The property’s condition
The state of the property has, of course, something to say in the pricing. A rundown, old house cannot be sold for the same price as a recently built house. You can view it as a trade-off: Pay less for the property here and now and spend many resources modernizing it or pay more for the property here and now and spend minimal resources on modernization.
For the everyday person, the middle ground is usually the way to go as to not get more than what you bargained for, while at the same time balancing your current finances with future returns and risks.
3. The property’s layout
In continuation of the previous point, the layout of a property also determines its value. Imagine a house with two floors and only one bathroom in the basement. Now, imagine a house with two floors and bathrooms on each level. Which house sounds more attractive to you?
A practical and well-planned layout will always be more desirable and, thus, contribute to the property’s overall value - and the price you must pay for it.
4. The floor level
Lower level units are typically less expensive than higher level units. The reason for this is that penthouse units are more prestigious and come with a better view, making them more coveted among buyers. Though a ground floor condominium can be just as accommodating as its penthouse counterpart, the reality is that the latter is just more attractive which, in turn, affects the real estate price.
Want to know the difference between a condominium and apartment? Learn more about it here.
5. The sun’s path
Yes, even Mother Nature’s forces affect the property price. You would want your new home to have a good amount of natural lighting, but not so much that you are blinded by it while doing everyday things. And on the contrary, a home with minimal natural lighting can quickly become dark and depressing - there is only so much artificial lighting can do.
Always take the sun’s path into consideration when looking to buy property. When going to an open house, make it a priority to investigate how the natural light falls. The lack or overexposure of light can then be used as a bargaining chip in the buying process. Read more about the Danish real estate buying process here.
But are you even eligible to buy?
Keep in mind that it is one thing to look at the property price and another to actually pay it. Though real estate is considered by many to be a safe option for upcoming investors, there is still the fact that you have to put yourself into debt in order to finalize the purchase.
This is also why banks measure your debt-to-income (DTI) ratio before offering you a mortgage or loan.
The DTI ratio measures your ability to pay back money: a low DTI means there is a good balance between a person’s debt and income. Contrarywise, a high DTI indicates that a person has too much debt compared to their earned income.
Many forget that banks are businesses and that they are only lending you money because they can profit from it.
A game of fees
Even if everything goes according to plan and the bank offers you a mortgage/loan and the real estate agent has agreed to your offer, there are still more fees to pay.
A lawyer is essential when buying real estate and, as you can guess, their help doesn’t come for free. Another thing you must set aside money for is the fee for registration in the Danish Land Register. Both fees are usually included in the mortgage/loan, meaning you don’t directly pay, e.g., the lawyers fee directly to the lawyer him/herself. Instead, you get a bigger mortgage/loan to cover the costs.
And then there are all kinds of establishment costs, some of which are fair, while others give you the feeling of throwing money out the window. The last part can be avoided, however, if you have a partner like Bomae by your side. Not only do we provide homebuyers with price reductions up to 14%, but we also negotiate with banks to ensure our customers get the best possible mortgages and loans for their budgets.
Thank you for reading, we hope you found the article inspiring and useful.