From Nordhavn to Sydhavn, shiny new apartment buildings are shooting up around the city to accommodate the 10,000 new arrivals Copenhagen must absorb every year.
But they’re not being built fast enough, and competition in the city’s housing market remains fierce. According to Finance Denmark, apartments cost 70 percent more than in 2010, while houses are 45 percent more expensive. Renting an apartment is also 50 percent more expensive than in 2010, according to Politiken newspaper.
The problem might be that demand isn’t being met because the wrong types of homes are being built. So argues Minister of Transport, Building and Housing Ole Birk Olesen, who believes that a bonfire of regulations will help make Copenhagen’s housing market more affordable.
“The only thing that will reduce housing prices in Copenhagen and other large Danish towns is a larger and more varied supply of housing,” Olesen stated in an op-ed in Berlingske last month.
He may have a point. According to Statistics Denmark, the market for larger and more expensive apartments has grown four times faster than small apartments. Compared to the market in 2010, there are 12 percent more apartments sized 100 square meters and over, and only three percent more that are under 100 square meters.
Olesen blames municipal housing regulations that require the average size of apartments in new housing developments to be at least 95 square meters.
“The current conditions for housing in Copenhagen are far too restrictive. The regulation that an average home be 95 square meters, tight restrictions on how tall a block of flats can be, and a ban on building flats near old villa areas, all contribute to limiting the number of new homes as well as making them too similar and too expensive.”
Olesen has now asked his ministry to investigate the structural barriers and incentives that impede the development of a varied housing market in order to help inform better housing policies across the country.
His preference is less, not more, regulation, and he points to cities such as Houston, Texas as an example of how a deregulated housing market can supply enough and affordable homes.
“It’s an international city with very liberal rules about building new and taller. It’s attracting people from across the USA because there is strong business and cultural development, but without very high housing prices,” he told Politiken newspaper.
He stresses that he doesn’t want 50-floor skyscrapers in the middle of residential zones. Rather, apartment buildings should be permitted to rise a few stories higher, and closer to other, less dense forms of housing.
Professor Gertrud Jørgensen, from the Department of Landscape Architecture and Planning at the University of Copenhagen, agrees that deregulating the housing market might provide smaller and cheaper homes, but they would also likely be of lower quality.
“This might be tempting in the short run, but in the long run, it undermines the quality of the city as a living space for families who already have trouble finding affordable homes. There is also the significant risk that deregulation would be used by speculative developers to build small, low-quality dwellings and use the intense pressure on the housing market in Copenhagen to get high prices for them anyway. There is already quite a large share of relatively small dwellings in Copenhagen, and they go for very high prices,” says Jørgensen.
And while Houston might have affordable housing, it has come at a high price, she argues.
“Houston is – on a global scale – an exemplary case of how not to build a city. The density is extremely low, which means that the city and its citizens mainly depend on cars for transportation. It is difficult to sustain services at close proximity to homes, and public transit is not feasible due to the low number of people in the vicinity of stations. While this might be a tempting model for Olesen, it would definitely ruin Greater Copenhagen as a green and liveable city region. Apart from environmental concerns, it would create chaos on the roads and long travel times for the population – even longer than today. Houston might have cheap housing, but that comes at the cost of other qualities that a modern city wants in order to stay competitive in the long run.”
Right diagnosis, wrong cure
An expensive housing market can have grave consequences for the social fabric of cities. In London and Paris, homes in the city have become unaffordable for average workers with middle and low incomes, who are forced to commute long distances for work.
It’s an issue that preoccupies Copenhagen’s Lord Mayor Frank Jensen, who wants to ensure that Copenhagen does not become a rich man’s ghetto. One tool at his disposal is a national regulation that allows municipalities to require that up to 25 percent of homes in new building projects be set aside as social housing for low-income workers. Doing so will ensure an 8,200-unit increase in social housing capacity by 2025.
But Olesen argues the policy is counter-productive and does not bring down prices in the rest of the housing market. This is because while most people might want to own their own home, either outright or as part of a co-op, social housing still remains an attractive and inexpensive alternative.
In an interview in Politiken, he claims that left-wing city administrations promise cheap social housing in return for votes from low and middle-income workers, who might be fortunate enough to qualify for housing below market price – a market price that would be lower if it weren’t for the fact that 25 percent of the new housing stock was set aside as social housing.
Katrine Lotz, Head of the Institute for Architecture, Urbanism and Landscape at the Royal Academy of Fine Arts, regards Olesen’s position as a political attempt to undermine the municipality’s efforts to ensure a mixed city. For while the city is in need of new and cheaper housing, the benefits of deregulating the market and stopping the construction of social housing do not outweigh the risks.
“Every time you build, you use an opportunity to make the city better, which is why the city makes demands on developers to make sure they give back. Deregulating lessens the demands on developers and results in a less attractive and liveable city. So in the short term it could increase the city’s population, but it exacts a cost in terms of the city’s attractiveness,” says Lotz, arguing that this would affect Copenhagen’s ability to recruit international knowledge workers.
“A mixed and heterogeneous city, with high density in one place and lower density another, doesn’t have to be bad. Working deliberately with contrasts can work well. But when housing gets more dense, you end up with homes that get no sunlight, and we have invested a great deal of effort since the 1950s to provide people with that basic quality,” says Lotz, referring to the demolition of the city’s inner courtyard buildings.
“I doubt we can argue that the situation is now so severe that we have to ignore that.”
Still, Lotz agrees that Copenhagen’s housing regulations could be tweaked. The 95 square metre rule could be revisited, and experiments could be made with new types of homes that have, for example, private rooms but shared common spaces.
One major issue is a national regulation that forces land owners, such as the city developer By & Havn, to sell land at market price. This means private developers, buying land at high prices, are essentially in charge of how the city develops. They have an incentive to build homes that will best recoup their investment, rather than improve the city as a whole. If the city were able to set aside small plots of land for smaller housing associations and philanthropic organisations, it could result in a more varied housing stock too, she argues.
“Olesen’s diagnosis is right, the prices are skyrocketing because demand is outpacing supply. I just think his cure is wrong.” M