Analysis Of Income Influence On Single Family House Price In Denmark

1997 words - 8 pages

Financial Management programme
1st semester 2009

Methodology Project

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Analysis of income influence on single family house price in Denmark

The report has been prepared by group 3:

Supervisors:

Delivery date: 29 October 2009

Number of words: 1.904

TABLE OF CONTENTS

Preface 2
1.Introduction 3
2. Problem Statement 4
3. Motivation for the Choice of Problem Statement 4
4. Delimitation 4
5. Method 4
6. Analysis of income and single family house price changes 5
7. Conclusion 8
8. List of sources and literature 9

Preface

Our group wants to thank all people who helped us and especially to our teachers Nina Røhr Rimmer and Anne Lassen for given advices ...view middle of the document...

The situation of single family house price is continue to decline after property prices peaked between 2006 and 2007. There are lots of reasons of price changes, for example changes in people income, decreasing or increasing interest rates, improving economy, increasing urbanization exc. The rate of income until 2007 was increasing and at the moment due to the financial crisis is going to decrease. Now the house price to income ratio[2] is 9.75 and it is very low, because normally this ratio will be much higher in low income countries than in high. So in our report we will try to analyse this ratio, how the income and house prices are related and how the income affects prices.

2. Problem Statement

“How the increasing income affects single family house price in Denmark?”

3. Motivation for the Choice of Problem Statement

After presenting the first presentation about Danish property market, our group came to the conclusion that the price of single family houses is the most interesting part which we would like to analyse more. We have decided to analyse the influence of income to house prices in Denmark because we suppose that income makes one of the the greatest affection on the house prices and property prices at all. We also suspect that it can be useful information for the costumers, because they can use the income index, as the indicator of property market and plan there future purchasing of the property and precisely purchase of single family house. It is also can be relevant subject for the investors, so that they can decide if the real estate is the profitable investment. Once we analyse all collected data, we will be able to answer how the increasing income affects single family house price in Denmark.

4. Delimitation

Even though we have mentioned several reasons of price changes in the introduction, our report will only treat income influence on single family house prices and will not focus on any other indicators which have influence on the house prices.

5. Method

In order to answer the question posed in the problem statement first we conducted some researches:
• we collected general statistic information from global property market sites and database on single family house prices in Denmark during previous years;
• we collected information from database on average income for all people in Denmark and made a chart by using this data;
• we search for factors, which affect the income changes;
• we search for the necessary information, which is related to income and price;
Next step was to compare and analyse the information and charts, than relating income to single family house prices and making a conclusion from the results we get.

6. Analysis of income and single family house price changes

Personal income in Denmark is predicted to rise over 1990 to 2015, both in terms of mean annual gross income and mean annual disposable income. Dispose income is expected to grow...

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