The proportion of first-time buyers in the Reykjavík capital area housing market has increased significantly over the past year. First-time buyers are younger than before and purchase smaller properties. The average purchase price of properties in this demographic is around ISK 50 million [$382,000; €338,000].
First-time buyers over one third of sales
These figures come from a report published by the Economic Division of Landsbankinn bank today. In the third quarter of 2021, the proportion of all buyers on the property market that were first-time buyers reached a record 33.8%. The average age of first-time buyers has also fallen. It dropped to 29 in the second quarter, its lowest since 2006, rising slightly to 29.2 in the third quarter. The total number of first-time buyers was 983, a decrease from a record 1,354 in the first quarter of this year.
As the average age of first-time buyers has dropped, so has the average size of the properties they purchase. The average size of apartments purchased by first-time buyers was 94 square metres [1,011 square feet], around 38 square metres [409 sq ft] smaller than the average of other demographics.
More first-time buyers despite rising prices
The Landsbankinn report concludes by stating that rising prices have not prevented many buyers from entering the property market. Lowered interest rates and construction of new apartments have increased access to housing, according to the report. Now that interest rates are rising again and the Central Bank has tightened mortgage requirements, demand for housing is expected to decrease.
While conditions on the market have benefited many middle-class buyers, there are indications that the pandemic recession has had the opposite impact on low-income residents of Iceland. A report published earlier this year found between 5,000 and 7,000 people in Iceland were living in properties classified as commercial or industrial buildings and not residential buildings. The largest group among them were people who had lost their jobs as a result of the COVID-19 pandemic.