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During the Danish property bubble of 2001 through 2006, Danish property prices rose faster than at any point in history, in some years increasing by more than 25%. Apartments and homes near the big cities rose especially fast.
Some of the rise can be attributed to falling interest rates, the introduction of new loan types , improving economy and increasing urbanisation, higher wages along with other factors. Some observers have also noted increased interest in homes and a dramatic increase in the number of TV programs regarding home decoration, home sales, gardening etc. The increasing number of parents buying apartments for their children is also an important factor, dramatically increasing the demand on smaller apartments, typically 2 - 3 rooms, thus giving rising prices from the lower segment of apartments.
However, many banks and analysts acknowledge that prices have increased more than can be explained by their models even when taking the economic factors into account and that homes have indeed become less affordable. In particular, it is becoming increasingly difficult for first-time buyers to enter the market, and they now make up a historically low fraction of all buyers.
This has led some observers to speculate that the Danish real estate market may be in a bubble where price increases have been fueled by speculation beyond what can be justified by fundamental economics. Some have warned that the market may be in for a correction, i.e., major price decreases. Still, as of March 2007, this has not occurred. Apartments in Copenhagen have fallen 7% in the first quarter of 2007 and the supply is still rising.