The number of construction cranes in Iceland is reaching the record levels of pre-crash 2007, according to figures from the Administration of Occupation, Safety and Health (AOSH). which could suggest an overheating in the housing market.
In 2007, 364 cranes were in operation, compared to 349 today, up from 277 last year.
Using construction cranes to measure the volatility of the economy came to prominence in Iceland in 2008, when Professor Robert Z. Aliber at the department of International Economics and Finance at the University of Chicago claimed that the high number suggested that a housing crash was imminent. His predictions turned out to be correct.
Magnús Árni Skúlason, economist with Reykjavík Economics, told Fréttablaðið that despite the high figure, the situation was very different this time around.
“In 2007, we had a housing bubble and an over abundance of real estate loans, today the situation is the opposite,” Magnús said. “Today, we have a large number of first time buyers and an influx of foreign workers and tourists.”
He points out that The Housing Financing Fund (HFF) has estimated that in order to meet demand, around 9,000 apartments are needed over the next three years. The demand is then further inflated by the meteoric increase in the number of tourists. In 2007, only 485,000 people visited the country, compared to 1.8 million in 2016.
“Therefore, the high number of cranes is not just due to the construction of apartments, but also to meet the increasing demand for tourist accommodations.”
Either way, prepare for a skyline ruled by the mighty crane.