INTERNATIONAL
Denmark an unexplored land
Norway
Pretty houses but they’re in short supply.
norway High standards and regulation
interest rates in Europe. (Swedish mortgage rates remain below two per cent.) The RICS European Housing
review explains that these markets have also been helped by restraint in the new housing supply; newbuild has been limited over the past decade, so that the oversupply that damaged many ‘hot’ markets hasn’t occurred. However, while housing prices have increased, transaction volumes remain below 2008 levels. These countries are not a typical
market for either British holidaymakers or property investors, and few agents deal with them. For instance, a search of Rightmove reveals not a single property in Norway, Sweden or Denmark, while Finland has 21 properties, mainly in ski resorts. While Homesoverseas.
co.uk picked Norway as its fourth most attractive market in 2010, the portal doesn’t actually show any properties in the country, or in any of the three other markets.
Denmark: unexplored by UK agents but rising
prices could be attractive.
Norway is arguably a very defensive economy, with its economy focused on oil, timber, shipping, and technology, and a growing population with only three per cent unemployment. New housing output has fallen, so there is less supply. For a UK investor, though, high prices in the main cities may deter investment, though building standards are high. Holiday homes in south-east and eastern Norway are expensive; properties on the long coastline are cheaper. One point to note is that estate
agency is a regulated profession in Norway; all agents are required to carry NOK 10m public liability insurance (about £1.2m). Another intriguing facet is that Norwegian law recognises oral contracts, so purchasers need to be careful not to commit themselves accidentally.
Like Norway, Denmark is another market that seems to be completely unexplored by UK agents despite the fact that prices are heading north again after a soft 2009 Realkreditradet, the association of mortgage banks in Denmark, posted Q3 2010 figures showing prices of flats rising six per cent year on year, and by as much as 12 per cent in Copenhagen, though growth was slowing towards the end of the year. However, yields on Copenhagen
properties are as low as 4-5 per cent. That is about the same level as UK residential yields; factor in currency risk and a more tightly regulated market, with very complex rental law and rental levels set by adjudication rather than the market on many properties – and Danish buy-to-let looks relatively unattractive.
SweDen a safe bet
Sweden is the largest of the four markets and has seen the highest growth in the past couple of years, having experienced a property and banking crash in the early 1990s and seen a 10-15 per cent fall in property prices during 2008. However, experts are divided on whether prices will continue to rise; interest rates were recently increased by the Riksbank, and economists expect the bank to move rates upwards again this year and next. Q1 2011 has already seen prices falling one per cent in response to the rate rise and mortgage cap, and though few (so far) are predicting a major fall in prices, that will take some of the froth out of the market. It’s interesting that the National Housing Credit Guarantee Board is a lone bearish voice, predicting price declines of up to 20 per cent. The Swedish market is 60 per cent
deNmark
owner-occupied, but it also has the largest private rented sector in the EU after Germany. However, buy-
PROPERTYdrum JUNE 2011 53
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