Danish Homeowners Are Insolvent

At least 150 000 Danish homeowners are technically insolvent, Danish media reports. For many of them it comes as a shock, as they’ve just been informed of their critical situation.

“The housing prices have fallen twice as strong in this crisis compared to the past. Almost one in every third of the youngest homeowners are technically insolvent. My expectation is that it will be more.”

Jens Lunde


The reason for the eye-popping Danish news is to be found in the country’s very special property assessments. Properties in Denmark are only valued every second year. Since the last assessment, the home prices have fallen almost 50 percent.

“The latest property assessments will be shocking reading for many Danish families,” the Danish newspaper EPN writes.

At least 150.000 Danish families are technically insolvent and will lose money if they must sell their home.

According to the newspaper most of the will just now discover this, when the latest official value of their residences are being released.

Home prices in Denmark have not fallen this much between two reviews, ever.

Many will find that the value of their property has been cut in half over the last two years.

Denmark has a separate law on “assessment of the country’s real estate“.

Housing values are being reviewed every two years.

The reviews was undertaken by the Danish IRS in October, but the individual home owners are not enlightened to know the value that is determined before tax settlement is sent out in March the next year.

(Here’s the full law text – in Danish)

“Housing prices have fallen twice as strong in this crisis compared to the past. Almost one in every third of the youngest homeowners were technically insolvent. My expectation is that it will be more now. Not necessarily among the youngest, but among older homeowners.  Some are in for a nasty surprise, ” associate professor, Jens Lunde, at Copenhagen Business School says.

He adds that it’s less important whether home owners are indebted up to the chimney; that if they’re not stands to sell  or would like to borrow against the non-existent release.

Chief Economist Ulrikke Ekelund says that there are surprises in store for those who have not had their house valued by an estate or mortgage agent in recent years.

“Since the last price assessment of the houses some years back, this will be an eye-opener for homeowners. Some people will probably choose to cushion a little, either by paying off the house or by saving in other ways. If one don’t have to move, it doesn’t mean much to be technically insolvent. But it is unpleasant, and one is locked, “ Ulrikke Ekelund says.

She points out that property assessments in 2005 and 2007 were far from the current market value, and that the new  assessments were carried out in October but made public first now. Therefore, prices may have changed.

(Hopefully for the better).

Original article in Danish.

(Google-translation)

Related by the Econotwist:

Denmark In Danger Of Becoming The “New Greece”

Traders Short Record Amount of Euro

Is Mark-To-Market Accounting Coming To An End?

E.U. To Reform Economic Policy

European Commission Warns Of “Lost Decade”

Europe’s Real Estate Industry: “A long, Slow Haul To Recovery”



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