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Has the coronacrisis halted urbanisation?

Many media outlets have reported that the number of people migrating from Denmark’s largest cities now exceeds the number of people moving into the cities. Migration patterns have a great impact on property investor demand for mainly residential properties, with some experts even claiming that the coronacrisis has caused a structural change in terms of where Danes prefer to settle.

However, the population count is in fact on the rise in the largest Danish cities – and has been for many years now. This article explains how this adds up.

Significant variation in population growth across Denmark

Over the past decade, the City of Copenhagen has seen the steepest increase in inhabitants, namely all of 17.4%. At the other end of the scale, the Municipality of Lolland has seen an 11.4% decline in inhabitants in the same period. In comparison, the national population growth rate was 5.2% in the past decade.

Figure 1 illustrates relative population growth in Danish municipalities in 2012-2022. The figure shows that population growth has been concentrated in five growth areas:

  1. Greater Copenhagen and municipalities of Zealand within reasonable commuting distance from Copenhagen
  2. Aarhus and neighbouring municipalities (Skanderborg, Silkeborg, Horsens and Odder)
  3. Odense
  4. Aalborg (including the Municipality of Rebild)
  5. The Triangle Region (mainly Vejle and Middelfart).

Generally speaking, the municipalities that are located farthest away from the above-mentioned five growth areas have seen a population decline in 2012-2022.

Figur12_BefolkningstilvkstenerkoncentreretifemomrderiDanmark_UK

Figure 2 shows projected population growth on a municipal level until 2032 based on population forecasts by Statistics Denmark. The figure shows that the population forecast for the next decade foresees a continuation of historical population growth trends.

In consequence, the five growth areas to have seen the steepest increase in inhabitants in the past decade are identical with the areas for which Statistics Denmark forecasts the strongest population growth in the next decade.

Population growth irrespective of higher population outflow

So, how does population growth in major cities tie in with the negative net migration lately broadcast by the media? In this context, it is important to bear in mind that the population growth in a given year in addition to net migration from other municipalities factors in also the birth-rate surplus and net immigration.

To highlight population trends in 2021, Figure 3 breaks down municipal population growth in Denmark’s top-10 largest cities into various sub-components. The figures quoted next to each of the horizontal bars denote population growth as the sum total of the following migration types: Birth-rate surplus, Net migration, and Net immigration.

Figur3_Fdselsoverskudogpositivnettoindvandringfordestrstebyomrder_UK

The figure shows that all top-3 cities – Copenhagen (including Frederiksberg), Aarhus and Odense –experienced negative net migration in 2021. In other words, the number of people moving from these three cities to other Danish municipalities exceeded the number of people moving into the cities from other Danish municipalities.

However, the figure also shows that the three cities have seen population growth irrespective of negative net migration because the number of births has exceeded the number of deaths (birth-rate surplus), and because immigration from abroad into the cities has exceeded emigration (positive net immigration).

This confirms the importance of viewing net migration in a broader perspective. Negative net migration in the largest cities does not necessarily spell a population decline or reduced demand for housing. Among the top-10 largest cities, only Esbjerg experienced a slight decline in inhabitants in 2021.

Young children and their parents moving out of the cities – young singles moving in
Figure 4 breaks down net migration by age in Denmark’s four largest cities. Mainly 18-22 year-olds are flocking to the cities, typically to study, whereas young children and their parents are moving out of the cities.

The new city dwellers tend to be young singles with no children living at home, while those leaving the city increasingly tend to be couples and their possible offspring, in pursuit of dwellings that offer more space than those that are within their financial reach in the cities.  

Figur4_Brnefamilierbliverlbendeerstattetafungestuderende_UK

Net migration into largest cities tracking cyclical changes
Assuming that the coronacrisis has caused a structural change in settlement preferences among the Danish population, this is something that calls for the attention of investors and developers of residential and retail properties, etc.

Several experts have pointed out that the coronacrisis has amplified the disadvantages of living and working in densely populated towns and cities, with the increased use of homeworking during the coronacrisis triggering substantial migration out of the large cities. It is claimed to be easier for office workers to reside in a remote distance from the workplace if office attendance is not required on all working days.

Figure 5 zooms in on the migration patterns of the top-4 largest Danish cities in 2006-2021. The figure shows that net migration dropped in all four cities between 2020 and 2021.

Figur5_Negativnettotilflytningfordestrstebyomrdererikkeetnytfnomen_UK

However, Figure 5 also shows that the negative net migration in the largest cities by no means is a phenomenon singular to the coronacrisis. The explanation becomes evident when reviewing migration patterns in Copenhagen (including Frederiksberg), Aarhus and Odense.

Net migration tends to track cyclical changes in the economy: During periods of soaring housing prices and low unemployment, like in 2006-2007 and 2021, the cities experienced negative net migration, whereas net migration was positive in 2010-2013, when employment levels were high and the preceding years had seen downtrending housing prices.

This may be due to the fact that periods of soaring housing prices render it more difficult for families to find the desired amount of space in the cities where prices are the highest, prompting an increasing number of families to move to out-of-town locations instead.

This suggestion is supported by the most recent settlement analysis by the City of Copenhagen. In the analysis, people leaving the municipality were asked to cite the reason for moving from the municipality. 28% of respondents stated that they would have liked to stay in the City of Copenhagen but moved for financial reasons. Among families with young children, the figure was as high as 39%.

In addition, the financial crisis dealt a particularly hard blow to workplaces outside the large towns and cities. This may have been one of the contributing factors turning negative net migration positive in the largest cities in the years after the financial crisis.

Round and around we go …
Figure 6 highlights variations in geographic migration patterns by showing net migration relative to the population count of Danish municipalities in 2006, 2011 and 2021, respectively. The figure reveals interesting migration dynamics between Greater Copenhagen, Aarhus and Odense, respectively, and their catchment areas.

In 2006, a year of low unemployment and high housing prices, the top-3 largest cities experienced an outflow of inhabitants into neighbouring municipalities in southern and western Zealand, eastern Jutland and on Funen, respectively.

In 2011, when unemployment was high and housing prices had come down, the migration trend reversed: The top-3 largest cities experienced an inflow of inhabitants at the expense of several neighbouring municipalities.

In 2021, when the unemployment rate had come down again and housing prices had seen a steep increase, we saw renewed net migration away from the three largest cities and into their neighbouring municipalities.  

Figur6_Geografiskeflyttemnstre_UK

The analysis shows that city-to-environs migration dynamics are correlated with labour market trends and movements in housing prices. In times of economic upturns, the prevailing trend has been net migration away from the largest cities and into the surrounding municipalities. Conversely, we have seen positive net migration into the largest cities during economic slowdowns.

We believe that on this basis it is not possible to conclude with any certainty that the coronacrisis itself, nor increased homeworking on account of the pandemic, has caused a structural change in future migration into major cities. However, it is likely that the boom in housing prices witnessed during the coronacrisis has accelerated negative net migration from the largest cities.

Urbanisation is a megatrend, and we do not expect increased homeworking to alter the fact that Denmark’s largest cities are attractive places to live. Moreover, it is worth bearing in mind that negative net migration from the largest cities has not resulted in a population decline or reduced demand for housing in the cities.

Read more news from Colliers here.


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Gregers Nytoft Rasmussen

Head of Research

Copenhagen

Gregers is responsible for Colliers’ Danish research function. He has a strong track record with project management of data-driven research, and his primary tasks are related to preparing statistical and econometric analyses.  

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