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The Danish Housing Market: Less Subsidy and more Flexibility

Listed author(s):
  • Espen Erlandsen
  • Jens Lundsgaard
  • Felix Hüfner

While Denmark has fairly flexible labour and product markets in most respects, the housing market stands out with large direct and indirect subsidies for all types of housing and a highly regulated rental market hindering mobility, probably resulting in a mismatch between housing needs and use. In the current housing policy framework there is quite a contrast between the well-functioning market for transactions of owner-occupied housing (supported by the highly liberalised mortgage market) and the highly regulated rental housing market. This paper assess the recent development in Danish house prices, followed by a discussion of ways of replacing the costly government intervention in the Danish housing market with more market-based mechanisms, thereby achieving policy objectives in a more efficient and targeted way. The paper reviews the main areas for reform, including overall subsidisation of housing, rent regulation, social housing, and how housing supply could be made more responsive. Le marché du logement au Danemark: moins de subventions et plus de souplesse Alors que les marchés du travail et des produits sont dans l'ensemble assez souples au Danemark, le marché du logement se distingue par le nombre important de subventions directes et indirectes pour tout type de logements et un marché de la location très régulé qui est un frein à la mobilité, ceci ayant sans doute pour conséquence une disparité entre les besoins en logements et ce qui est disponible. Dans le cadre de la politique de logement actuelle, il existe une différence flagrante entre le marché des logements occupés par leur propriétaire, qui fonctionne bien (soutenu en cela par un marché hypothécaire très libéralisé), et un marché locatif très contrôlé. Ce document analyse les développements récents dans le domaine des prix des logements au Danemark, puis examine les moyens permettant de remplacer l'intervention coûteuse de l'État sur le marché du logement danois par des mécanismes davantage axés sur le marché, et d'atteindre ainsi les objectifs des pouvoirs publics d'une manière plus efficace et plus ciblée. Ce document traite des réformes à mener, notamment la question des multiples aides publiques au logement, la régulation des loyers, les logements sociaux ainsi que la manière d'accroître l'offre.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 513.

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Date of creation: 08 Sep 2006
Handle: RePEc:oec:ecoaaa:513-en
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