Sales of apartments are on the rise again, alongside the lowering of policy rates, bringing new life back to the real estate market, a new report from the Housing and Construction Authority (HMS) states.
Hundreds more sold
About 1,000 apartments were taken off the market in January, or about 300 more than in December. More apartments have not been sold in January since 2021, when the policy rate was at its absolute lowest. The increase in sales can therefore likely be attributed to the recent lowering of the policy rate.
Speaking to RÚV, HMS economist Jónas Atli Gunnarsson says he believes demand will continue to rise.
“We believe that demand will continue to be considerable,” he said. “As interest rates continue to fall, precisely because there are many people who clearly want to buy an apartment but have not been able to do so until now due to the Central Bank’s tight lending requirements and high interest rates.”
Age is a factor
Another reason for increasing demand is age. The HMS report points out that according to Statistics Iceland, there were about 44,000 people from the ages of 22 to 29 in the beginning of last year, compared to 38,000 in 2016. As such, there is an increase in people of the age when Icelanders are most likely to be looking for an apartment to buy. That demand, Jónas believes, is being met with an increasing supply.
“We have seen a lot more apartments coming onto the market than we expected in the last housing census,” he said. “What we think is happening is that developers have been putting a lot of emphasis on completing projects to bring more new buildings onto the market.”
