An Assessment of the Danish Real Estate Market

Karl Magnus Larsen

Student thesis: Master thesis


This thesis explores the Danish real estate market to determine its condition in 2020. Since the rebound in real estate prices after the financial crisis, the market has outperformed itself several times. Each year Denmark saw record high real estate prices. My motivation for writing this thesis is based on this development. I want to investigate whether the real estate market is healthy today. Are real estate prices sustainable in the long-run and backed by their fundamentals or is the real estate market in the early stage of a bubble? In order to answer these questions, the following research question was prepared:
“Is the Danish real estate market in 2020 fairly priced based on its underlying fundamentals?”
Three different analyses were carried out in order to conclude on the research question. First of all, the fundamentals that influence the real estate market were analyzed individually, so that their behavior could be compared with the behavior of real estate prices. Secondly, a regression analysis was conducted to test which of the fundamentals could explain the real estate prices. Lastly, Case and Shiller’s seven criteria for a bubble in the real estate market were discussed in relation to the 2020 real estate market in Denmark.
As the existence of a bubble is highly difficult to determine before it has burst, I was aware of the risk of not being able to find concrete answers to the research question. However, the results of these three analyses showed that the Danish real estate market in 2020 is fairly priced on a national level. Most of the fundamentals supported the increased real estate prices. But there may be a bubble tendency in Copenhagen as the apartment market prices there are much higher than in the rest of the Danish real estate market.

Educations, (Graduate Programme) Final ThesisMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2020
Number of pages76
SupervisorsJens Lunde