Business Round-Up: House prices will fall, economists predict

Business Round-Up: House prices will fall, economists predict

Data from Boligsiden reveals that the price of villas and townhouses fell by 1 percent in July due to high inflation, while the price of apartments fell by 1.5 percent. Economists expect further declines in autumn and winter.

When seasonally adjusted, this is the biggest decline in more than a decade. According to Jeppe Juul Borre, chief economist at Arbejdernes Landsbank, this may just be the start of a long-term decline in house prices.

Facing headwinds
Since the spring, central banks around the world – including Denmark’s National Bank – have raised interest rates in response to high inflation.

Lise Nytoft Bergmann, who is Nordea’s chief analyst and housing economist, says in a written comment: “The housing market has faced headwinds due to rising interest rates and high inflation, so it is not surprising that prices are starting to fall, is not surprising.”

No reason for panic
Since last summer, interest in home buying has slowly declined, while price developments have “moved from hectic to moderate” and have fallen slightly in the past month.

Bergmann expects this development to continue, but at the same time she sees “no reason for people to panic”.

“If you’ve owned your house for a long time, it’s not necessarily a bad deal. In the past two years, house prices have increased by around 20 percent. So even if the price drop continues into the fall, overall you are still profitable,” she said.

The family business Panduro acquired by the Nordic group Lekolar
The owners of the world-renowned hobby chain Panduro from Denmark are selling the family business. It was founded in Denmark in the mid-1950s and is currently based in Malmö. The hobby store chain has a total of 95 stores in Sweden, Denmark, Norway, the Netherlands and Belgium. Its new owner is the Nordic group Lekolar, which supplies schools and daycare centers with play equipment, furniture and hobby and learning products. According to Thomas Panduro, the chain’s current deputy manager, it was a difficult decision, but Panduro is convinced that it is the right solution for the company. The agreement enters into force in the autumn.

Price increases exceed wage increases
According to the Dansk Arbejdsgiverforening (DA), wages rose by 3.4 percent in the second quarter compared to the same period last year in the second quarter – an increase far from the 7.4 percent price increases that took place in the same period. As a result, the so-called ‘real wages’ have fallen – that is, the purchasing power of wage earners to buy the same things as before. According to chief economist Erik Bjørsted at Dansk Metal, this is the biggest drop in real wages in recent decades.

At the same time, several indicators show that the Danish economy is growing again
After a small dip in GDP growth in the first three months of the year, new figures from Statistics Denmark point to a surprising increase of 0.7 percent in the second quarter of the year. Michael Svarer, professor of national economics and former chief financial officer, told @@@ that the numbers were “very positive”. Meanwhile, the employment indicator also showed a 0.7 percent increase in total employment in the second quarter. Despite the obstacles of soaring energy prices and rising interest rates, Danish companies appear to be extremely competitive.

Water shortages in important rivers may further increase the cost of living in Denmark
The hot and dry weather in Europe in recent months has caused water levels in rivers to drop to extremely low levels. Rivers are an important way of transporting large quantities of goods and raw materials, and when large river barges cannot sail in Europe’s rivers, it can lead to more expensive goods in Denmark. One of Europe’s most important waterways, the Rhine in Germany, is currently facing a water shortage, which will mean imports from Germany are likely to become more expensive. Ole Sloth Hansen, commodity analyst at Saxo Bank, told TV2 that transport and production are becoming increasingly expensive due to the pressure from high energy prices.

The wind turbine manufacturer Vestas shows a loss in the second quarter
Vestas announced last Wednesday morning that the accounts for the second quarter of the year showed a result before tax of minus 139 million euros due to an increase in the costs of necessary components, energy and raw materials. Its revenue fell 7 percent to €3.3 billion compared to the same period last year. CEO Henrik Andersen attributed it to geopolitical uncertainty and disruptions in the supply chain, which in turn led to higher costs. Its rival, Siemens Gamesa, which filed its accounts a fortnight ago, also had a dismal performance.

Maersk refuses to deliver higher taxes
For the first six months of this year, Maersk has made a profit of DKK 113 billion, which is almost as much as the shipping company made in the whole of 2021. On Tuesday, it raised its profit forecast for 2022 by more than DKK 50 billion. and if Maersk achieves that, Danish history will be written with a new record for the largest profit. The Ministry of Finance wants Mærsk to contribute more to the treasury, but Mærsk’s chief executive sees no reason to pay more tax under the existing tonnage tax system.

The pharmaceutical company Novo Nordisk is again adjusting its expectations for 2022
Novo Nordisk has raised expectations for sales growth for 2022 following increases in both operating profit and profit for the first half of the year. Novo Nordisk now expects sales growth of 12-16 percent and operating profit growth of 11-15 percent. Novo Nordisk CEO Lars Fruergaard Jørgensen said it was very pleased with the growth. However, Mediet Finans reports that both results were slightly below analysts’ expectations. Novo Nordisk’s shares fell by 9.40 percent at the close of trading after the accounts were published.

Danish electricity prices reach their highest level in 12 yearsp
Influenced by a combination of factors, including war, drought and lack of wind, Danish electricity prices became unusually expensive during midday last Wednesday evening. According to data from Den Nordiske Elbørs, the price rose all the way to 5.5 kroner between 7:00 p.m. and 8:00 p.m. that evening, and with taxes and VAT included, the actual price reached between 8 and 9 kroner. Jim Vilsson, senior economist at Energinet, told TV2 that it is a level that has not been seen before. Compared to other European countries such as Estonia and Lithuania, where prices on Wednesday evening reached almost DKK 30 per kilowatt hour, the Danish electricity price situation is still much better.

Lloyd’s Register marks the 150th year in Denmark
In August, the British maritime technology company Lloyd’s Register (LR) celebrates 150 years of business in Denmark. It has worked closely with Danish Shipping, the industry association for Denmark’s shipowners, and in recent years has provided technical support for decarbonisation strategies and worked closely with the Danish shipping company Maersk and Torm.

Source: The Nordic Page

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