Cost of Rent Has Increased Slowly Since Pandemic Hit Skip to content
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Photo: Golli.

Cost of Rent Has Increased Slowly Since Pandemic Hit

Rental prices in Iceland have risen by just 1.9% since January 2020, economists of the Landsbanki bank report.

At the same time, real estate prices have skyrocketed. The increase can largely be explained by a growing demand for real estate and reduced interest rates.

According to the report, the rate of first-time buyers has never been higher which curbs the demand for rental flats. Fewer tourists also mean less opportunities for landlords to rent their flats short-term. All these factors contribute to higher real estate prices and a slower rise in rental prices.

For the past twelve months, rental prices in the capital area have risen by 3.4% while real estate prices have increased by 16%. In comparison, the consumer price index rose by 3% during that same period.

Rental prices vary between different areas in the city. Two-bedroom flats in the west side of Reykjavík (Vesturbær) currently have the highest price tag, or 3.441 ISK [23€, 26$] per square metre. Within the capital area, rental prices for two-bedroom flats are lowest in the municipalities of Garðabær and Hafnarfjörður, which are situated rather far away from the city centre. The situation is similar for three-bedroom flats, where the highest rental prices are found in the west side of Reykjavik, and the lowest in the municipality of Kópavogur.

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