The rent in Iceland’s capital is raising at a higher percentage than the cost of buying an apartment, underscoring the exclusivity of the market.
RÚV reports that, according to a new monthly report from the Housing Financing Fund (HFF), rent in Reykjavík has risen by 9.2% between November 2017 and 2018, while the price of apartments in the same area over the same time period has risen by 6%. This marks the ninth month in a row that rents are rising faster than the prices for buying apartments, putting greater pressure on Iceland’s lowest-paid workers, who are the most likely to rent.
The tightening of the rental market in Reykjavík has been ongoing. The average rent in downtown Reykjavík goes for about 3,000 ISK per square metre.
Not all of these rental properties come from individual property owners, either. Gamma, one of the largest rental companies in Reykjavík, owns numerous properties all over Iceland’s capital, but have raised their rents by 50% to 70% over just the past two years.
The resulting precariousness that a lot of renters feel is unsurprising, with one fifth of renters in Reykjavík saying they fear losing their homes.
Renters have also had to contend with AirBnB, which has a twofold effect on the rental market. First, landlords can typically extract higher rents from those visiting Iceland than they can from locals, which means locals have a harder time competing for available properties than those staying in Iceland only temporarily. Second, as Icelandic law caps the amount of time someone can rent out their property on AirBnB to three months, leases of 12 months or longer become less common, as property owners seek to maximise the time they have for renting out their properties through the company.