Real Estate Turnover in Iceland down by ISK 25 Billion Skip to content

Real Estate Turnover in Iceland down by ISK 25 Billion

The turnover on the real estate market in Iceland has dropped by ISK 25 billion (USD 330 million, EUR 208 million) in the first quarter of this year compared to the same period in 2007. Financial analysts expect up to five percent drop in par value of properties in Iceland this year.

In the first quarter of 2007, the real estate turnover in Iceland amounted to over ISK 62 billion (USD 818 million, EUR 516 million), but in the first three months of this year it has only been ISK 37 billion (USD 488 million, EUR 308 million), Fréttabladid reports.

“Times of great uncertainty in the economy lie ahead and it is difficult to estimate how the situation will develop. The price of real estate is likely to drop but I cannot say by how much,” said Oddgeir Ágúst Ottesen, adjunct professor at the economic department of Reykjavík University.

The analysis departments of the three largest commercial banks in Iceland, Kaupthing, Glitnir and Landsbanki Banks, also expect the price of real estate to drop. Kristrún Tinna Gunnarsdóttir at Landsbanki said par value of properties may drop by as much as five percent in 2008.

All three banks expect, however, that the price of real estate in areas where there is constant demand for properties will remain rather stable, while in areas where demand is low and supply high, like in urban areas outside the capital region, the price will drop more rapidly.

Grétar Jónasson, managing director of the Association of Real Estate Agents in Iceland, said the market is “frozen” and that it can have serious consequences.

“The government has announced that the stamp duty will be abolished and many buyers are waiting for that to happen,” Jónasson said. “It is irresponsible of the government to make the situation [of stagnation in the real estate market] worse by not saying when exactly that will happen.”

Click here to read more about the stamp duty abolishment.

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