Danish real estate sector also in trouble as homes find it difficult to sell


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Wednesday, 24 August 2011
Denmark has since the collapse of Lehman Brothers that ushered in the economic crisis of 2008 had a more difficult transition than other Nordic countries, apart from Iceland.

Specifically, the crisis year’s had greater impact on real estate and housing market in Denmark, and thus the country's banks and other lenders. These Danish problems don’t seem to be getting over.
Statistics show that although house prices continue to fall, it still takes longer and longer to sell a Danish home. Consumer confidence in Denmark, according to August 1 assessment was at its lowest level in almost two years.

Despite the problems, the interest rates on ten-year government bond in Denmark followed the Northern European trend downwards this year, with a fall from 3.59 percent in April to the current 2.36 percent.

Denmark's credit ratings are among the best, AAA, and the Danish krone has been since the end of last year been �re more expensive.
But the CDS market, where investors can insure against the borrowers default on payments, have increased uncertainty surrounding the Danish positions. A CDS contract that protects against Denmark suspends payments over the next five years, two months almost tripled, from 0.32 to 0.94 percentage points.

The corresponding CDS contracts for loans to Germany, the euro zone’s economic engine, have also lifted from 0.30 to 0.75 percentage points.
By Team

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