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House Price Statistics - Methodology Note

The Association of Danish Mortgage Banks, the Danish Mortgage Banks' Federation, the Danish Association of Chartered Estate Agents, and the Danish Bankers Association jointly publish the House Price Statistics prepared in cooperation with e-nettet.

The House Price Statistics are based on statements of properties offered for sale on the internet and registered as sold in the public Sales and Valuation Register, SVUR, or the joint municipal property register, ESR. The latter is only applied where a transaction has not yet been registered in SVUR.

The statistics are published four times a year. Publication usually takes place in the middle of a month, about two and a half months into a quarter. The statistics cover average prices per square metre sold, number of transactions, times-on-market for sold properties, initial listing prices and last prices advertised (closing price) when dwellings have been registered as sold. Data are published for the entire country, 5 regions, 11 subregions, 98 municipalities and at postal code level. The data cover transactions completed in the quarter concerned.

e-nettet supplies and validates the data. Only open market transactions are included, which are also screened to establish whether a property has actually been put on the market by an estate agency. This is one of the unique features of the statistics. The transaction prices realised are also compared with the listing prices of the dwellings sold, which is another novel feature of the House Price Statistics.

The House Price Statistics include transactions registered in the electronic registration system. Reporting takes place at transaction level. This means that information is available on listing prices before a sale, transaction prices realised, municipality number, weighted area and number in the Building and Dwelling Register (BBR). The weighted area means the total area converted using the conversion key of the mortgage banking industry agreed with the Danish Financial Supervisory Authority. (see Appendix A)

Time of registration

The Association of Danish Mortgage Banks and the Danish Mortgage Banks' Federation published the Property Price Statistics in the period from 1995 to October 2010. The statistics were based on data from mortgage banks when customers had raised a loan to purchase a home. Based on data for 2008, the average time elapsed from the signing of the agreement to sell to loan disbursement was computed at approximately 53 days.

The House Price Statistics are based on data reported to the electronic registration system which include selling prices and transaction dates. For this reason, the House Price Statistics are not affected by the time lag between the transaction date and the loan disbursement date as the transaction date is entered together with the selling price in the electronic registration system.

House Price Statistics - master data

The House Price Statistics apply a number of definitions, including the following:

Price per square metre Calculated on the basis of the weighted floor area according to the Danish FSA
Transaction date Date of signing of the agreement to sell

Realised transaction price
Before 8 August 2009 = Cash purchase price / cash-equivalent purchase price After 8 August 2009 = Purchase price according to land register
Initial listing price The listing price observed the first time a property is advertised for sale on the internet
Closing price The last price observed of a property advertised for sale on the internet


 
Calculation of average prices per square metre at municipal and postal code levels

Prices per square metre are first calculated for the individual property and then by postal code and municipality as a whole by summing up the individual prices per square metre and dividing by the total number of transactions.

Calculation of average prices per square metre by subregion, region and at national level

Prices per square metre at municipal level in the House Price Statistics are applied for calculating prices per square metre by subregion, region and at national level. The weighting of prices per square metre at municipal level to arrive at prices by subregion, etc is based on the current housing stock in the individual municipalities. The individual municipality is assigned a weight corresponding to its relative housing stock within each property category in the calculation of the numbers for subregions, regions and at national level.

The housing stock is updated once a year.

Adjustment of prices per square metre

Prices per square metre are adjusted for municipalities with no transactions as they would otherwise carry a weight of an average price of 0 and thereby have a negative effect on average prices per square metre. The adjustment is made by applying the last known price per square metre for the municipality concerned. This neutralises the adjustment in relation to the calculation of average prices per square metre for the preceding quarter. Municipalities with no transactions for the entire period (2004 -> date of calculation) are not included in the weighting.

Validation of prices per square metre

Properties with particularly high or low realised transaction prices are eliminated from the statistics. This is done to avoid that atypical properties affect the statistics and to counteract any data input errors in connection with reporting.
The lower validation limit is DKK 1,000 per square metre. The upper validation limit is DKK 30,000 per square metre in 1995 prices and is projected according to the index based on the national price change in the year ended.

Calculation of time-on-market

Times-on-market are calculated on the basis of the time elapsed from the first time a property is advertised for sale at the website boligsiden.dk to the date when the agreement to sell is signed. Properties removed from the internet without having been sold and reappearing within 90 days at the same or a new estate agency are considered to be in the same selling phase, and the first advertising date is therefore not reset.

Average prices per square metre by postal code and municipality

Prices per square metre by postal code and municipality are not published if there are less than five underlying transactions per quarter

Continuous adjustment for the past four quarters

Data are submitted once every quarter and contain revised figures for the past four quarters. In this connection, the annual public land assessments by the Danish tax authorities may imply changes to the property categories, for example if a holiday home is approved for all-year residence and recategorised as a detached house. Naturally, an extremely small part of the housing stock is recategorised.

Historical data on property prices from 1992 and onwards

One of the unique features of the House Price Statistics is that, besides transaction prices realised, the initial listing price as well as the closing price before the property was sold are also identified. Calculation of listing prices was not possible before 2004, for which reason one should distinguish between data before and after 2004.

2004 onwards

The House Price Statistics are based on data on properties offered for sale on the internet and registered as sold in the public Sales and Valuation Register, SVUR, or the joint municipal property register, ESR. The latter is only applied where a transaction does not yet exist in SVUR.

1992 - 2003

The period 1992-2003 includes all transactions registered in the public registers as "open market transactions" – without elimination of properties not advertised on the internet.

Because of the different methodology applied for the two periods, the average prices per square meter will not be comparable.

Appendix A: Conversion key for calculation of area in the House Price Statistics

Area is calculated on the basis of the actual number of square metres according to the Building and Dwelling Register (BBR).

Conversion takes place using the weighting listed below:

Conversion to weighted area

Unit  Weighting

Ground floor and other full floors
- Floor area used for occupancy  100%

Basement
- Approved for occupancy  100%
- Not approved for occupancy  40%

 

Attic

- Fitted out and approved for occupancy  90%
- Only approved for usage  10%
Garage, carport and outhouse

- Garage/outhouse build into a house ground floor  40%
-Garage/outhouse detached or adjacent to a house
 25%
- Carport detached or build into a house ground floor  10%

 

Outhouse

- Outhouse floor area  15%
Owner-occupied flats

- Floor area according to BBR (Danish building and house registry  100%


The statistics are based on the three property categories of the Danish FSA: detached and terraced houses, owner-occupied flats and holiday homes.

The following types of property are not included in the data:

  • Retail properties
  • Agricultural properties
  • Factory and warehouse properties
  • Market gardens
  • Obsolete and demolished properties
  • Undeveloped areas
  • State and municipal properties
  • Parent properties for owner-occupied flats
  • Owner-occupied flats with no occupancy
  • Subsidised cooperative housing units

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