Price boom far from over in $450bn Danish mortgage market

Bloomberg

After half a decade of negative interest rates, Denmark’s housing market looks like it can only move in one direction: up. Michael Rasmussen, the chief executive officer of Nykredit Realkredit A/S, the biggest Danish mortgage lender, says the “tailwind” looks like it will last.
“We have a strong real estate market and we, of course, benefit from that. I still see a low interest-rate environment for some period and I also see a pretty healthy real estate market, at least for the rest of the season.”
Denmark has had negative central bank rates since the middle of 2012, which is longer than any other country on the planet. The policy has done little to feed consumer prices, with inflation at 1.1 percent in April. Though a four-year high, the reading follows an extended period of disinflation and is considerably lower than the 4 percent price gains Denmark saw in mid-2008.
But with short-term home loans available at negative interest rates in Denmark, the monetary environment has created a frothy property market. After crashing in 2008, the Danish housing market has made a convincing comeback. Copenhagen saw a 12 percent annual increase in apartment prices in April, which Nykredit analyst Jacob Isaksen characterized as a “surprising acceleration” from 10 percent in October. House prices are now approaching a 2007 pre-crisis peak, while apartment prices are about 10 percent above the high they reached before the market crashed. (From peak to trough, Denmark’s house prices collapsed more than 30 percent once the last bubble burst at the height of the global financial crisis.)