Denmark’s housing market is past the deepest point in its slump and the key triggers for a recovery are now in place, central bank Deputy Governor Per Callesen said.
“Denmark is a healthy economy, a surplus economy” so “there are no rational economic reasons why it shouldn’t pick up,” Callesen said in an interview in Copenhagen yesterday. The housing market has now “bottomed out,” he said.
The comments follow a more-than 20 percent plunge in Denmark’s house prices since a 2007 peak. The nation’s gross domestic product probably contracted 0.4 percent last year, matching a decline in the 17-member euro area, as households stopped spending and businesses shelved investments, the government estimates. Denmark’s burst housing bubble also brought with it a regional banking crisis that has wiped out more than 20 lenders since 2008.
The nation’s economic plight has prompted lawmakers to pass legislation that encourages bank mergers in an effort to support the industry and underpin lending. At the same time, home-loan rates sank to record lows last quarter as Denmark’s mortgage bond market, the world’s third-largest, attracted investors eager to escape the debt crisis inside the euro area.
An increase in Denmark’s house prices “could happen” this year, Callesen said.
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