Housing Prices Never Higher

Housing prices in Iceland are at the highest they have ever been according to a report by Landsbankinn, and increasing shortages mean that they are expected to go even higher.

If you bought an apartment in march, then congratulations, your apartment is now worth 2.2% more than it did when you bought it. If, however, you were fortunate enough to buy an apartment a year ago, then you will be happy to know that you could sell it today for 25% profit. Since it’s post-crisis nadir of 2010, prices have gone up 50%.

The madness is expected to continue as earlier in the year Arion bank predicted that a further 30% increase should be expected in the next three years.

Looming shortages

Last month, The Housing Financing Fund released a report that claimed that 9,000 more apartments need to be built over the next three years in order to keep up with demand. In the years following the crisis, the construction of new apartments ground to a halt and only in the last couple of years has the market returned to life.

The uptick in tourism has further pressure the housing market, as many apartments have gone out of regular circuitry and instead are used to house tourists.

Living at home

Compared to the other Nordic countries, Iceland has the highest percentage of people aged 25-29 who still live with their parents. Today, over 21% of the group have not flown the nest— up from 15.5% in 2005. In Norway that number stands at under 10% and in Denmark at just 5.3%.