House prices in Denmark sank to a seven-year low in the first quarter of 2012, according to the Association of Danish Mortgage Banks and the Mortgage Bankers Federation.

The average price per square metre for Danish property fell by 7.4 per cent in the first three months of the year compared to 2011, down to 10,897 kroner. As prices drop, sales are slowing too, the figures reveal, with the average time a property spends on the market before selling up to 230 days – the highest since ADMB began recording data eight years ago.

The stalled market follows a burst housing bubble as Denmark’s economy entered recession last year.

Businessweek reports that Christian Heinig, chief economist at Realkredit Danmark emailed the following note to investors: “There’s an increasing risk that potential buyers will continue to hold back and postpone a decision to buy a home.”