Potential house prices in ghetto areas

Macro & Finance

25 Jan

Potential house prices in ghetto areas

Original title: Analyse af boligsalg- og priser i hårde ghettoområder

As a part of the plan “One Denmark without parallel societies – No ghettos in 2030” a broad majority in the Danish parliament have decided that the share of social housing in 15 ghetto areas must be reduced to a maximum of 40 pct. by 2030. The goal is to achieve a more mixed housing and resident composition. The share of social housing can be reduced by e.g. selling existing properties, converting social housing or selling new properties in the area. However, the expected sales revenue from selling social housing in the 15 ghetto areas are uncertain because Danish social housing has never been strategically sold off before.

In the light of this uncertainty, Copenhagen Economics was asked by the Danish Ministry of Transport, Building and Housing to analyse the potential sales prices in each of the 15 different ghetto areas in four sales scenarios.

The main conclusions of our study are:

Sale of existing properties is a useful tool to reduce the share of social housing in ghetto areas and achieve a more mixed housing and resident composition
The sales potential is largest in the ghetto areas in or close to large cities
It can be difficult to find investors willing to buy new and existing housing in ghetto areas placed in smaller Danish cities

The study was commissioned by the Danish Ministry of Transport, Building and Housing.

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