The Housing and Infrastructure Agency states in a recent report that the real estate market has slowed down significantly, with the lowest level of purchase agreements seen since April 2015.
The slow in sales is regarded as the first sign of a cooling off of a heated real estate market in Iceland, where property values have risen significantly in the last year.
Where previous months had seen steady price increases of 2 – 3%, the increase slowed to a more manageable 0.5% in June. As of June, some 53% of units across Iceland have sold above asking price, indicating both increased demand for housing, and shortage of supply. These forces have also driven up the average rent, which in June 2021 was around ISK 197,500, and now sits around ISK 207,000.
Interest rates have played a key role in the slowdown, but the supply of apartments in the capital region has increased more rapidly than expected in the month of August, with some 200 more units than expected. Neighboring municipalities of the capital area have also experienced a steady increase in housing supply.