Housing prices fell by 10.5 percent last year, according to a new analysis, and experts say prices are unlikely to increase anytime soon

A new global housing price index study from The Economist shows that Denmark was among the top European countries for rapidly declining house prices last year.

According to the new analysis, house prices in Denmark fell by 10.5 percent from the first quarter in 2008 to the first quarter this year. In addition, it showed that house prices increased by 103 percent during the housing boom of 1997 to 2009.

Only two other European countries had greater price drops in the housing market last year, with a drop of 10.7 percent in Ireland and Britain facing an 11.3 percent decrease.

House prices also increased substantially in Britain and Ireland during the last 12 years, with respective increases of 158 percent and 182 percent.

According to Troels Theill Eriksen, senior analyst with Nordea, the International Monetary Fund has previous highlighted the Danish housing market as being one of the most overvalued and that this could be one of the reasons that prices are falling so dramatically.

However, experts are quick to warn that the falling prices are not an indication that the global housing crisis will resolve itself quickly.

Torsten Sløk, economist with Deutsche Bank in New York, told Børsen financial daily that the housing crisis in Denmark is on a different trajectory than that of the US, where the housing bubble was accompanied by sub-prime loans.

In Denmark, the increasing house prices created the bubble because it was hard for anyone to see how house prices could fall. For countries in this situation it will take a longer time before house prices begin to increase again,’ said Sløk, explaining that hesitant sellers will prolong the downturn in the housing market.