Movement on Iceland’s real estate market broke records in May and June, increasing by around 50% compared to the same period last year. Banks also approved a record ISK 22.3 billion ($159 million/€140.5 million) in new housing loans in May. Experts say historically low interest rates have encouraged buyers, despite the downturn caused by the COVID-19 pandemic.
The data comes from the Húsnæðis og Mannvirkjastofnun (HMS)’s monthly report. HMS’s CEO Þorsteinn Arnalds told RÚV it’s difficult to pinpoint the cause of growth. Some economic uncertainty in the fall of 2018 may have led to a build-up of people wanting to buy but waiting for a better opportunity. “And then definitely factors such as lower interest rates have pushed many, because it’s definitely possible for many people to buy up without increasing their debt to income ratio greatly or that sort of thing.”
Housing prices have risen by 5.5% in Reykjavík between May of 2019 and 2020. There was also an increase in notarised purchase agreements in the rest of the country.