Building a new home in Denmark has become a less attractive financial proposition in many municipalities, with rising construction costs outpacing housing price increases since the pre-pandemic era. According to an analysis by Prognosecenteret, the economic viability of new construction varies significantly across the country, with some areas facing potential losses for homeowners.

The analysis reveals a sharp divide, particularly across the Great Belt, with only a few municipalities west of the strait showing improved conditions for new construction. Specifically, the cost of building a new house has increased by 32% since before the pandemic, translating to an additional expense of approximately 785,000 kroner for a 175-square-meter house in Zealand. This increased cost puts pressure on prospective homeowners, especially in areas where housing prices have not kept pace.

Municipalities like Haderslev, Frederikshavn, and Brønderslev are identified as the least favorable locations for new construction, as housing prices have either stagnated or declined since the pandemic, compounding the impact of increased building costs. Conversely, the capital region and parts of North Zealand, including Frederiksberg, Lyngby-Taarbæk, Gentofte, Hørsholm, and Copenhagen, offer relatively better economic prospects for new construction due to substantial housing price increases.

Despite the overall trend, certain provincial municipalities, such as Kalundborg (driven by the “Novo Nordisk effect”), Lolland, Morsø, Syddjurs, and Halsnæs, have experienced significant price increases, making new construction more appealing than before the pandemic. However, analysts caution against relying solely on this analysis, as even with improved conditions, new construction in these areas may not necessarily be a universally sound financial decision.

Experts emphasize the importance of considering factors beyond initial costs, such as energy efficiency, low maintenance, and modern amenities, which can offset higher construction expenses over time. While new construction may entail potential construction errors, delays, or financial surprises, it can be a worthwhile option when existing homes do not meet a family’s needs. New construction might not grind to a halt even in less attractive municipalities, as personal circumstances might influence such decisions.