Major Increase In First-Time Homebuyers Expected This Year

The real estate market has rebounded at the start of the year after a slight dip in the latter half of 2024. There has been a notable increase in the number of people in their twenties in Iceland in recent years, which is likely to affect demand in the near future, reports RÚV.

Around 1,000 apartments were taken off the market in January, 300 more than in December. This could indicate increased activity in the real estate market, according to the latest monthly report from the Housing and Construction Authority (HMS). No more apartments have been removed from sale in January since 2021 when interest rates were at their lowest. The recent increase may be due to falling interest rates.

Jónas Atli Gunnarsson, an economist at HMS, says that the market is recovering after a significant slowdown in the fall.

“We believe demand will continue to be considerable, especially as interest rates continue to fall. Many people who clearly want to buy an apartment but have not been able to due to tight loan conditions at the Central Bank and high interest rates will now be able to,” Jónas Atli Gunnarsson says.

The report specifically discusses the growth in the number of people in their twenties. According to Statistics Iceland, over 44,000 people aged 22-29 lived in Iceland at the beginning of last year, compared to just under 38,000 in 2016. “We’ve noticed significant population growth in Iceland, but what’s particularly interesting is that this growth is driven by people in this age group, and such growth in population needs to be met with new apartments,” says Jónas.

Jónas notes that the construction industry has not kept up with this trend until now, but it has picked up in recent months.

“We’ve seen many more apartments coming onto the market than we had anticipated in the last housing survey. What we believe is happening is that developers have been putting a lot of emphasis on completing projects to bring more new buildings onto the market,” he says.