Signs of Recovery on Icelandic Real Estate Market Skip to content

Signs of Recovery on Icelandic Real Estate Market

The real estate market in Iceland, which went into a state of deepfreeze after the banking collapse in 2008, seems to have entered a period of thaw. The latter part of 2010 has been much livelier in the real estate market than the first months after the crisis hit.

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Photo by Páll Stefánsson.

Notarized bills of sale in the capital region have increased by 41 percent compared to 2009. At the same time real estate exchange has decreased. While such agreements were involved in 36 percent of all bills of sale in 2009, they dropped to 24 percent this year, Morgunbladid reports.

Lease contracts have increased significantly. They are twice as many as five years ago and so it appears as if predictions of a stronger rental market have come true.

The turnover in the real estate market is still insignificant compared to what it was during the height of the economic boom but it still increased by 16 percent between 2009 and 2010, from ISK 99 billion to almost ISK 115 billion (USD 850-980 million, EUR 650-750 million).

It is notable that financial institutions account for approximately ten percent of sellers in property trade in the capital region. For comparison, in 2006 and 2007, they accounted for less than one percent of sellers but the percentage has been growing steadily.

Real estate agents say they sense increased demand for property and have a rather positive outlook for 2011.

That feeling is backed by the Gallup Expectation Index as the index on planned real estate purchase is up from 4.3 to 7.0 points and hasn’t been higher since September 2008, one month before the banking collapse.

As of January 1, 2011, a new ratable value will take effect, which involves an 8.6 percent nationwide decrease of property value.

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