Published February 14, 2017
AirBnB and tourist accommodation in general is having an effect on the local rental market, and it is hard to pin down this effect quantitatively.
According to a new report from Arion Bank, they point out that tourism has become the largest industry in the country. A steady increase in people not only visiting but moving to Iceland, alongside an increase in the number of Icelanders moving out in the country, has numerous effects, not least of all where the housing market is concerned.
“In 2016, the number of foreign citizens living in Iceland increased by about 4,000, compared to about 3,000 the year previous, and there has never been a greater number of foreign citizens living here,” the report states in part. “It can be estimated that a large portion of them work in jobs connected to tourism in some form or another. Everyone needs a roof over their heads, and this rapid increase in people has put increased pressure on the housing market.”
Arion Bank points out that the “apartment supply” is emptying, and there have not been as few apartments on the market in 11 years.
At the same time, AirBnB and similar forms of guest accommodation are increasing rents for locals.
“The effect of AirBnB on the increase of property values are twofold,” the report points out. “First of all, it leads to an increased expectation of profit for renting a room or apartment in that people are ready to pay a higher amount. Second of all, AirBnB reduces the supply in the apartment market. The first effect is difficult to quantify but carries with it the great increase of property values in downtown Reykjavík.”
That said, Arion Bank points out that AirBnB is currently renting out about 3,000 apartments in Reykjavík, resulting in 3,000 fewer apartments on the general market. However, a lack of hard data makes it difficult to ascertain by how much rent has increased as a direct result of AirBnB and similar accommodations.