Newsletter_Q2_2018_UK

Newsletter Q2 2018

Copenhagen housing area per capita keeps shrinking

110

105

100

95

90

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80

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Copenhagen

Denmark

Note: Developments in housing area per capita and number of housing units sized 100+ sqm, index 100 = 2009 Source: Statistics Denmark

particular, prime market rents have been stagnant, in our opinion mainly due to the fact that the high price levels dampen demand. Nonetheless, there is evidence that the market for ownership housing is also affected by high prices. The demand for small and medium-sized Copen- hagen flats is booming, and Copenhageners there- fore increasingly settle for a compromise, trading-off housing area and square metre prices for the right location. In this market too, the past three years have seen dramatic price hikes. The hikes in this segment should be viewed in light of the fact that flats sized 90+ sqm actually accounted for the steepest relative increases in 1992-2009. This is especially remarkable as newly built flats account for a markedly greater market share than flats of 90+ sqm. The reason for this is the effective area requirements of residen- tial newbuilding in Copenhagen development areas, stipulating unit sizes of at least 75 sqm and 95 sqm on average. In terms of quality, newly built flats, all other things being equal, are superior to flats in the old housing stock; we therefore assume that the shift in demand is attributable mainly to pricing in absolute terms.

At the macro level, there is also evidence to suggest that pricing affects the structure of the housing market. Whereas the housing area per capita has remained constant at 57 sqm nationwide, in Copen- hagen it has declined from 45 sqm in 2009 to 41 sqm in 2018. This trend even applies, albeit less

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