The price of Copenhagen’s growing popularity

Rikke Nygaard, a 27 year old woman living in Copenhagen, is one of the citizens who supports the notion of regulating the housing market and agrees with the overall, political vision of intervening to make housing more affordable.   

When she moved out at the age of 20, she chose to rent an apartment with three other women rather than living on her own. “It was mostly for the rent prize. And also, it was fun. But it's because it's hard to pay rent when you don't really have a real job,” she says. 

Today, she lives on her own, but merely due to the money she inherited after her grandmother passed, allowing her mother to buy her an apartment. Without the family’s inheritance, she would far from have been able to own her own home. 

Yet her experience reflects a larger growing issue in Copenhagen and raises the question: how can people afford to live in a city which is becoming increasingly attractive to live in?  

Under the brand-new budget agreement for the housing market, which was reached last week, Copenhagen’s politicians are prioritizing building more housing, as one of the main solutions.  

But several experts differ on whether this will be sufficient, considering the factors which are driving up housing prices. 

 Why is Copenhagen so expensive?

Ismir Mulalic, who teaches urban economics and microeconomics at CBS, argues that prices keep rising due to the city’s growing appeal: “Copenhagen is a very attractive city at the moment. So many people would like to live in Copenhagen and that's why we see increases in housing prices”.  

He emphasizes that as long as we keep extending the metro, improving public transport and providing good amenities, the prices will keep rising. Yet Mulalic also notes that this was not always the case.  

“In the 1990s Copenhagen was not an attractive city”, Mulalic says, “therefore people moved out and housing was cheap. Since then, there’s been a lot of investment in the city. Now it's attractive and expensive." 

 Yet, as housing becomes more expensive for the average citizen and fewer people can afford to buy property, Mulalic also addresses that it will leave increasingly more people reliant on the rental market. 

“This is the old problem — we get more inequality,” Mulalic adds, and in accordance with the CBS professor, building more housing would therefore be an obvious solution to combat this growing gap.  

Rikke Skovgaard Nielsen, sociologist from the University of Copenhagen and expert in ‘affordable housing’, questions whether this alone is enough, and whether Copenhagen can simply build itself out of the problem. 

Is building more housing enough?

Skovgaard Nielsen agrees that it is the growing demand, which is pushing housing costs upward, but she also argues that the demand, which we see now, is not necessarily fixed. 

"The problem with that logic is that 10,000 households, who want to live in Copenhagen, is not a definite number. It's a number that will change, and the more we build in Copenhagen, the more interesting we make the city, the more people will want to live there." 

Her main argument is that Copenhagen’s challenges with affordability is something that cannot be separated from the rest of Denmark, as people choose where to live by comparing what options they essentially have at hand.  

"When you decide where to live, it's a relative decision comparing your different options [...] The worse conditions we create in the smaller cities, the more schools we close, the fewer buses we have, and the more difficult it is to get a loan for a house in the countryside, the more you push people towards the cities." 

The sociologist therefore sees a risk in focusing too extensively on the capital. 

"Urbanization has been an increasing force, and by building more in Copenhagen, we risk pushing even more towards this urbanization." 

According to her, Copenhagen’s housing challenges are therefore a more complex matter than simply relying on more housing as the solution. Although experts agree that it would help ease the pressure of the demand, it may also attract even more people to the capital, as Rikke Skovgaard Nielsen points out. 

For now, Copenhagen remains caught between two rather conflicting goals; becoming an even better place to live in, while also remaining an affordable city for completely ordinary people.