People buying property in Denmark should keep in mind that house prices are not guaranteed to continue their current upward curve, the country’s central bank has warned.

In a new analysis of the Danish housing market, the country’s central bank Nationalbanken says that buyers should not assume that steep rises in property values, particularly in the Copenhagen area, will last indefinitely.

The central bank has warned buyers who are relying on the property gaining value that they can be left with a debt larger than the value of their home if the market bubble bursts, for example in the event of a financial crisis like the one seen at the end of the 2000s.

Apartment prices in Copenhagen rose by 16 percent between the second quarter of 2024 and the second quarter of 2025, according to the analysis.

Such a steep rise in prices can represent a problem for the economy if home owners and buyers take it for granted that their properties will continue to gain value at the same rate, and if the effect begins to spread to other markets.

“If the sharp price increases continue and a self-reinforcing dynamic spreads to the rest of the country, the risk of macroeconomic imbalances will rise, which could also threaten financial stability,” the analysis states.

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The Nationalbank also states that home owners are in a stronger position than they were in the years just before the Global Financial Crisis of the late 2000s, when the housing market was also booming.

Homebuyers put down a noticeably larger percentage deposit last year than in the past, leaving them better positioned if property values fall later on, it said. 

New mortgage rules also play a role because homes are generally less heavily financed today than they were twenty years ago.

In contrast to the earlier period, there are no signs that Danish homeowners are out spending potential revenues from their property in anticipation of selling it at a profit, according to the central bank.

“From a financial stability perspective, it is important that homebuyers are resilient to a potential downturn in the housing market.

“The lending rules and sound credit principles at banks are crucial to ensuring that buyers do not take on excessive debt,” Peter E. Storgaard, head of Financial Stability at the Nationalbank said according to news wore Ritzau.