Regional House Price Differences in Denmark
Translated title
Regionale Boligprisforskelle i Danmark
Authors
Jespersen, Lukas ; Krogh, Lasse Horsholt ; Søndergaard, Jacob Lundby
Term
4. term
Education
Publication year
2026
Pages
104
Abstract
This thesis investigates the drivers of regional house price differences in Denmark and the extent to which economic factors can account for observed developments. The analysis covers 1998Q1–2025Q4 and focuses on owner-occupied flats and single-family houses in Copenhagen, Frederiksberg, Odense, Aarhus, and Aalborg, where pronounced differences in price levels and growth are observed. Methodologically, the study combines the DiPasquale and Wheaton (1992) four-quadrant model with error correction models to capture both long-run relationships and short-run dynamics between house prices and key determinants. User cost, first-year payments, disposable income, and housing stock are identified as central explanatory variables. The results show that price sensitivity to these factors varies by region: prices in the capital area respond more strongly to changes in housing costs and income relative to supply, while smaller municipalities are less responsive to fundamentals. These differences largely reflect supply-side conditions, with limited land in urban areas amplifying demand effects and more flexible supply adjustments in less urbanized municipalities. Differences across housing types are also found: user cost matters more for flats, whereas first-year payments play a larger role for single-family houses, indicating liquidity constraints. While the models explain a substantial share of price variation, they do not capture all movements, particularly around the Great Financial Crisis. Recent evidence points to increasing potential overvaluation in the capital region, supported by rising price-to-rent ratios, elevated house price expectations, strong credit growth, and broader use of priority loans. Additional factors such as parental purchases, parental financial support, and other supply-side elements may also contribute and warrant quantification in future research.
Denne afhandling undersøger, hvad der driver regionale forskelle i huspriser i Danmark, og i hvor høj grad økonomiske forhold kan forklare de observerede udviklinger. Analysen dækker perioden 1998K1–2025K4 og omfatter ejerlejligheder og enfamiliehuse i København, Frederiksberg, Odense, Aarhus og Aalborg, hvor der ses markante forskelle i prisniveauer og vækstrater. Metodisk kombineres DiPasquale og Wheaton (1992) fire-kvadrantmodellen med fejlkorrektionsmodeller for at belyse både langsigtede sammenhænge og kortsigtede dynamikker mellem huspriser og centrale determinanter. Brugeromkostning, førsteårsbetalinger, disponibel indkomst og boligbestand identificeres som nøglevariable. Resultaterne viser, at prisernes følsomhed over for disse faktorer varierer på tværs af regioner: I hovedstadsområdet reagerer priserne stærkere på ændringer i boligomkostninger og indkomst relativt til udbuddet, mens mindre kommuner er mindre følsomme over for fundamentale forhold. Forskellene kan i høj grad tilskrives udbudssiden, hvor begrænset areal i byområder forstærker efterspørgselseffekter, mens udbuddet lettere kan tilpasse sig i mindre urbaniserede kommuner. Der findes også forskelle mellem boligtyper: Brugeromkostning betyder mere for lejligheder, mens førsteårsbetalinger vejer tungere for enfamiliehuse, hvilket peger på likviditetsbegrænsninger. Modellerne forklarer en stor del af prisvariationerne, men ikke alle, især under den globale finanskrise. Nyere indikationer peger på stigende potentiel overvurdering i hovedstaden, understøttet af stigende pris-til-leje-forhold, høje prisforventninger, stærk kreditvækst og mere udbredt brug af prioritetslån. Yderligere forhold som forældrekøb, økonomisk støtte fra forældre og andre udbudsfaktorer kan også bidrage og bør kvantificeres i fremtidig forskning.
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