According to new data from Registers Iceland, Reykjavík rental prices are slightly lower than they were at the same time last year. This is the second month in a row showing such development, likely stemming from less demand as renters purchase real estate and fewer apartments used as short-term vacation rentals.
The Registers Iceland Capital area rental price index stood at 200,6 points in January 2021, down 0.6% from the previous month. For the past three months, the index has gone up 0.2%, but looking back 12 months, the index is lower by 1.9%. The rental price index refers to fluctuations in the weighted average rental price per square metre.According to the Housing and Construction Authority, this is only the third time rental prices have gone down between months since they began collecting data in 2011. The first time this happened was in May 2020.
According to The Housing and Construction Authority’s report on conditions in Iceland’s housing market, lower rental prices are likely due to the effects of the global pandemic and the government’s economic response. More young people are living with their parents, fewer tourists mean fewer apartments are engaged as short-term vacation rentals, and historically low Central Bank interest rates have led to record numbers of first-time real-estate buyers.