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In the second quarter of 2025, completed residential construction rose by 270,000 residential square metres – around 50% below the average seen in the first three quarters of 2023, when completed construction rose by 525,000 residential square metres. With an increase in population of 9,700 and an average area of 45 residential square metres per person, the housing requirement is estimated at 430,000 residential square metres. Despite the lower completion rate in the second quarter of 2025, the building balance improved in the second quarter of 2025.
By contrast, initiated residential construction was only 80,000 residential square metres in the second quarter of 2025, about 80% lower than the 2020-2022 average of 390,000 residential square metres.
If completed residential construction grow by 150,000-200,000 residential square metres per year and the 45 residential square metres per person is maintained, break-even population growth will be 3,300-4,400 people per year. However, as population growth is expected to exceed these figures, housing supply will fall short of demand – likely lowering vacancy rates and supporting higher rent levels. With the adjustments to higher interest rates largely complete, the outlook for residential letting appears positive.
Looking forward, population trends are uncertain as the timing and scale of the expected reduction in net immigration (people crossing the national boarder) remain unclear.
In Copenhagen, the population rose by approximately 5,700 people in the second quarter of 2025 (measured as a four-quarter rolling total), which is a downfall of 1,100 people compared to the first quarter of 2025, and 45% lower than the average population increase of around 10,500 people from 2009 to 2019.
The decline in population growth in Copenhagen is due to a somewhat more negative trend in net domestic movers (people crossing the municipal boundary), which fell to 5,400 people – approaching the record drop at the beginning of 2024, when net domestic movers fell by 6,700.
Although the trend in initiated residential construction points to a continued decline in completed construction going forward, there have historically been challenges with late reporting from Statistics Denmark. Taking this into account, the fall in completed construction will likely be considerably smaller than current figures indicate.
Put simply, if each person occupies an average of 41 residential square metres, an annual population gain of around 6,000 translates into a requirement for about 250,000 residential square metres. On that measure, the construction volume in the second quarter came close to meeting population-driven demand.
Looking ahead, a modest improvement in the construction balance is expected, which should keep vacancy rates low and support rent growth. Now that the adjustment to higher interest rates is largely behind us, the outlook for rental housing is positive – and prices for rental residential assets are expected to continue rising.
At Gorrissen Federspiel, we closely monitor housing developments and the availability of housing across Denmark. Looking ahead, it will be interesting to see how trends evolve through 2025 and the impact this will have on both the rental sector and the balance of new construction. The specialists at Gorrissen Federspiel’s Real Estate group remain available to assist with developing residential properties or facilitating the sale or purchase of property.