Some of the rise can be attributed to falling interest rates, the introduction of new loan types (such as interest-only mortgages), improving economy and increasing urbanisation, higher wages along with other factors.
However, many banks and analysts acknowledge that prices have increased more than can be explained by their models even when taking the economic factors into account and that homes have indeed become less affordable.
This has led some observers to speculate that the Danish real estate market may be in a bubble where price increases have been fueled by speculation beyond what can be justified by fundamental economics.
In 2006, the number of homes for sale increased dramatically, tripling in some areas.
Two of the major real estate agencies claim they are observing price falls, with the biggest agency (Home) claiming to have observed falls since July 2006 The softening comes at a time when there has been an explosion in the building of new apartments and homes all around in the country.