Supply of Affordable Housing Continues Decline in Capital Region

architecture Kirkjusandur apartments

The June report from the Housing and Construction Authority shows several trends, the most important of which is likely the continuing decline of affordable housing in the capital region.

Key points from the report

  • Total Property Valuation: 15.3 trillion ISK, over four times Iceland’s GDP.
  • Capital Area: Property valuations increase by 2.1%.
  • Rural Areas: Average increase of 6.6%.
  • Municipal Variations:
    • Highest increase in Flóahreppur (20.6%).
    • Significant increases in Tálknafjarðarhreppur (20%) and Skeiða- og Gnúpverjahreppur (19.8%).
    • Decrease in Kjósarhreppur (-1.5%).
  • Commercial Properties:
    • 5.4% increase in the capital area.
    • 7.4% increase in rural areas.
  • Summer Houses: Increase by 15.6% nationwide.
  • Average Property Valuation:
    • New average: 72.3 million ISK (previously 69.9 million ISK).
    • Capital area: Increase from 83.3 million ISK to 85 million ISK.
      • Multi-family apartments: Increase to 68.6 million ISK.
      • Single-family homes: Increase to 130.5 million ISK.
    • Neighboring municipalities: Increase from 58.4 million ISK to 61.2 million ISK.
    • Rural areas: Increase from 41.4 million ISK to 45 million ISK.

Supply of apartments changes little as demand increases

The apartment market has seen increased activity with more purchase agreements in recent months. Prices have risen by 4.9% in the first four months of the year, which translates to a 12.2% annual increase.

At the end of May, there were about 3,350 apartments for sale across the country, with around 2,000 in the capital area. Roughly half of the apartments for sale in the capital area are in Reykjavík, with more new listings in Reykjavík and Hafnarfjörður. In Kópavogur and Garðabær, the supply of new apartments has decreased, with around 70 new apartments for sale in each area.

More sales above asking price

The percentage of apartments sold above asking price has been increasing monthly in both the capital area and its outskirts. In April, 19% of all apartments were sold above asking price, with 21.3% in the capital area and 18.1% in its outskirts. This trend reflects rising apartment prices, similar to previous periods of market price increases in 2016 and during the onset of the COVID-19 pandemic in 2020.

In rural areas, the proportion of apartments sold above asking price is more variable, decreasing to 8.3% in April from 14.3% in March. This decline is partly due to fewer multi-unit apartment sales compared to single-family homes, which typically see higher proportions of sales above asking price in rural settings.

Almost no apartments in capital area under 60 million ISK

The report also notes that the supply of apartments priced under 60 million ISK [$430,000; €402,000] has decreased since last year, now comprising less than 15% of the total market supply. This shortage suggests difficulties for first-time buyers entering the market, which is further highlighted by a decline in young buyers in the first quarter of this year.

 

Does Iceland Have Uber?

Hreyfill Taxi Icelands Finest

Uber has not arrived in Iceland yet. However, there is a new, similar company called Hopp Taxis. The company is known as an electric scooter rental but recently introduced their car-sharing service and Hopp Taxis. You can download the Hopp app on both Apple and Android free of charge, and there is no subscription fee. It works like Uber; you can see the car’s location, arrival time, and price before confirming the ride, and the payment is made through the app. The drivers are all licensed taxi drivers and drive carbon-neutral or electric cars. Currently, Hopp Taxi operates in Reykjavík and its closest suburbs, such as Kópavogur, Garðabær, Hafnarfjörður, and Mosfellsbær, as well as Keflavík airport.

Taking the taxi in Reykjavík

Another option is to take a regular taxi. Taxi companies, such as Hreyfill and BSR, offer apps you can download to order a cab and monitor its location. The taxis have a much wider service area. Unlike Hopp Taxis, you will know the price once you have arrived at your destination, and the payment goes directly through the taxi driver, not the app. Note that taking taxis to and from Keflavík International can be expensive. An average taxi trip from the capital region to the airport may run from ISK 15,000 – 20,000 [$110-146, €100-134], so budget-minded travellers may find the Fly Bus a more economical option.

Iceland’s bus system

Iceland’s bus system, Strætó, is a great, economical transportation choice. You can plan your trip and see more comprehensive route maps on their website. To pay the fare, buy a ticket through the app Klappið or pay the exact amount in cash on the bus. About half of the buses in the capital area run from 6:30 AM to midnight, but some services may start later and end earlier. A night bus on Friday and Saturday nights runs from downtown Reykjavík to some of its surrounding suburbs. Note that the night route only runs from Reykjavík, not towards it.

Will the situation on the Reykjanes peninsula affect the capital area?

Reykjavík

Many travellers to Iceland have asked about the potential impact that a volcanic eruption on the Reykjanes peninsula might have on Reykjavík. While the usual caveats apply here (when and where the eruption will occur is difficult to tell with precision), the current consensus is that the capital region will remain largely unaffected.

That being said, Reykjavík residents and visitors alike could feel some side effects of the next major eruption in Iceland.

Reykjavík services and utilities

In a worst-case scenario, an eruption could disrupt operations at Svartsengi, a geothermal power plant and the main supplier of water and power to the Reykjanes peninsula. While the Reykjavík area sources its power from other plants, if operations at Svartsengi are disrupted, power from other plants may have to be diverted to keep the lights on in the region. Last winter also saw hot water shortages throughout Iceland, and a disruption to Svartsengi could exacerbate heating prices during the winter. For travellers, this might mean that public pools and geothermal spas could face closures or shortened opening hours.

Draft legislation has also been proposed that would raise property taxes in order to help fund the construction of protective barriers around Svarstengi. A similar increase to sales tax was also introduced to aid in reconstruction after the 1973 Heimaey eruption in the Westman islands. Though these taxes would not be directly passed on to travellers, it is possible that prices could indirectly rise in the wake of a tax hike.

Impact on travel

There has been concern during past eruptions on the Reykjanes peninsula that lava flows could disrupt Reykjanesbraut, the main transport artery between Reykjavík and Keflavík International Airport. This is not currently a concern, as it will likely surface somewhere near the town of Grindavík, located on the south coast of the Reykjanes peninsula.

The latest information from the Icelandic Met Office provides a map of the projected lava flow:

grindavík fissure
Icelandic Met Office Nov 11

Several roads have also been damaged due to seismic activity in the area. Grindavíkurvegur, the main road connecting Grindavík to Reykjanesbraut, was closed on November 10 due to damage. However, road closures are not expected in the capital area.

reykjanes road closures
Umferðin.is – November 13

Though the next eruption is expected to be significantly larger than the previous Reykjanes eruptions, its probable location means that air traffic will likely be unaffected. Located on the south coast of Reykjanes, prevailing wind patterns ought to blow any volcanic fumes south and east, away from the airport.

Health concerns

Previous eruptions have, however, caused some air pollution in the capital area. During the 2022 Meradalir eruption, those with preexisting conditions such as asthma, in addition to children and elderly people, were encouraged to avoid outdoor activity on some days when wind patterns brought the pollution to Reykjavík. As of right now, it is too early to say how an eruption near Grindavík will affect air quality in Reykjavík.

The situation on the Reykjanes peninsula is still unfolding, and it goes without saying that travellers should exercise common sense, stay informed, and listen to the authorities. However, the situation poses no immediate threat to Reykjavík and the greater capital area, and disruptions to the rest of the nation are likely to be minimal.

Resources

In addition to following our news coverage, travellers and residents alike may find the following resources useful:

The Icelandic Met Office

SafeTravel, for travel warnings and tips for staying safe.

The Icelandic Road Administration and its live map of road closures throughout Iceland.

The Department of Civil Protection and Emergency Management.

A live webcam stream from Þorbjörn mountain.

 

 

Capital Area Pools Closed to Conserve Hot Water

sundhöll

Pools throughout the capital region will be closed today due to the cold spell affecting Iceland.

Utility company Veitur will be cutting its supply of hot water to some of its largest users, in an attempt to reduce hot water use.

In response to Veitur’s reduction, Reykjavík City has made the decision to close the city’s pools today, January 19. The closures will also affect the bathing facilities at Nauthólsvík. The closures will also be in effect in the nearby towns of Mosfellbær and Kópavogur.

Bathers will however still be able to visit the pools in Garðabær, though water temperatures may be potentially lower than usual. The Seltjarnes pool will likewise continue to be open, as it is supplied directly from a geothermal borehole.

In a public statement, Veitur hopes to not have to limit the hot water supply for any longer than today, as warmer weather is expected. Pools are expected to open tomorrow, but this may be subject to change.

The pool closures come during one of the coldest winters in recent memory. This past December was the coldest since 1973, although average temperatures have risen slightly in January. Temperatures have been especially cold in the Reykjavík area, where it has not been colder (on average) since 1916.

In light of these unusual conditions, Veitur has also asked residents to help out in conserving hot water where possible. According to Veitur, some 90% of hot water use by Icelandic households goes towards heating alone. Residents are reminded to close doors and windows to conserve energy and to ensure that radiators aren’t blocked from heating the room.

All Reykjavík City Pools Closed

Laugardalslaug geothermal swimming pool in Reykjavík

Problems at the Hellisheiði power plant have led to a significant decrease in the production of hot water for the capital region, leading to closures of all pools throughout the city.

Hellisheiði is a geothermal production facility near Reykjavík and the main supplier of hot water to the capital area. The recent disruption there could mean a 20% decrease in hot water production.

See also: Three Pools in South Iceland Closed

According to a press statement, teams have already begun the necessary repair work, and the closures will only be in effect for the remainder of the day.

Prior to the winter cold snap, several capital area pools had been considered for temporary closures, including Vesturbæjarlaug, Dalslaug, Suðurbæjarlaug, and Ásvallalaug. However, conditions did not require their closure.

Now, however, the decision will affect all 18 pools of the capital area, at least for the remainder of the day.

For updates on the status of Reykjavík city pool closures, see the Reykjavík city website.

 

 

 

 

 

British Army Off the Hook for Mining of Rauðhólar

Reykjavík City Airport flugvöllur

New information has come to light regarding the destruction of Rauðhólar, or the Red Hills, a natural area of craters by Elliðavatn lake in the capital area.

Originally, some 80 of these craters stood on the edge of Reykjavík, but their numbers have decreased due to gravel mining. Previously, it had been believed that the British military levelled much of this area for construction material during the Second World War, with some calling this one of Iceland’s first natural disasters of the modern era. However, recent evidence reported by Vísir shows that aerial photographs taken of the area taken shortly after the war prove that this is not the case.

Friðþór Eydal, an author interested in the activities of the British army during the war years, said in a statement to Vísir: “Mining had already begun here before the British started their construction of the Reykjavík airport.” The city of Reykjavík, according to Friðþór, had begun using the site for gravel in road construction before the British arrived.

Much material for the construction of the Reykjavík airport came from Öskjuhlíð, the hillside now home to Perlan, and also Fífuhvammur in Kópavogur. There was indeed gravel from Rauðhólar utilised in the construction of the Reykjavík airport, but the British also took careful records of the amounts removed.

According to Friðþór, the 95,000 cubic metres taken by the British army can’t account for the total damage done to the Rauðhólar area. Additionally, the new photographic evidence taken in 1946 still shows the area as largely in tact.

The largest part of Rauðhólar then must have been taken after the war, by the city of Reykjavík itself.

The area was mined for gravel up until 1961, when it was given protected status.

 

 

 

Reykjavík City Proposes New Fee for Winter Tires

winter tires reykjavík

The Environment Agency of Iceland has introduced a new plan for air quality in the capital region which would advise local authorities to introduce new fees for studded winter tires, reports Fréttablaðið.

According to air quality expert at the Environment Agency, Þorsteinn Jóhannsson, there now exists the political will to push through these new regulations, which would aim to both improve air quality by lessening the particulate matter in the air, and also lessen wear on the capital’s roads.

Some, according to Þorsteinn, have stated that this would amount to a further tax burden on Iceland’s already-struggling rural communities. Because of the conditions during winter, it is practically a requirement for Iceland’s rural population to use studded tires. Þorsteinn, however, has clarified that the fee would apply principally to the capital region, and that visitors with studded tires to the capital would pay a daily fee. In this way, it would function much like a parking fee.

According to Þorsteinn, investigations show that studded tires cause 20 to 40 times as much wear to roads as non-studded. Þorsteinn also notes that although the legal season for winter tires is from November 1 to April 14, there are already many studded tires on the road in Reykjavík.

Alexandra Briem, chairperson of the city council, has also stated her support for such a fee, noting that additional methods to reduce air pollution and wear on roads are needed.

More information on car ownership and regulations can be found at the Icelandic Automobile Association.

New Bus Fare As Of This Saturday, Including 12.5% Hike

reykjavík strætó bus

This Saturday, October 1, the new bus fare will be in effect. The fare will be raised 12.5% across the board, applying to both single tickets and monthly passes.

In the announcement, Strætó indicates that the fare has remained unchanged for some time. However, operational costs have also risen sharply recently, including 40% increases in oil prices. Strætó also claims to be especially impacted by shorter working hours in the workforce, which have resulted in operational budget deficits.

The price hike is intended to minimize further “optimization” of routes in the capital region.

Read more: Strætó Reduces Public Bus Service in Reykjavík

Despite the fare hike, Strætó emphasizes in the announcement that with plans to have a carbon-free bus fleet by 2030, Iceland will be insulated from future fluctuations in oil prices.

The new pricing structure, which was approved September 16, is listed on Strætó’s website as follows:

Single Fares

 
Adults 550 kr.
Youth 275 kr.
The elderly 275 kr.
Disabled people 165 kr.
Children, 11 years and younger 0 kr.

Seasonal Cards

 
30 DAYS 12 MONTHS
Adults 9.000 kr. 90.000 kr.
Youth 4.500 kr. 45.000 kr.
The elderly 4.500 kr. 45.000 kr.
Disabled people 2.700 kr. 27.000 kr.
Children, 11 years and younger 0 kr. 0 kr.

 

Weather Alerts Issued Across the Country Today

Waves crashing over Reykjavík lighthouse

The Icelandic Met Office has issued yellow and orange weather alerts across the country today, February 25. An orange weather alert will be in effect for the capital region from 11 AM to 5 PM today.

A season of storms

Two powerful lows have swept across Iceland in relatively quick succession: one in late January and another last Monday. In keeping with this theme, the Icelandic Met Office has issued yellow and orange weather alerts for all of Iceland today.

An orange weather alert will be in effect for the capital region from 11 AM to 5 PM. Reykjavík is expected to be bombarded with heavy wind and precipitation.

As noted on the Met Office’s website: “SE 18-25 m/s with sleet and later rain. Damages due to flying debris are likely and construction workers are encouraged to secure construction sites. Important to clear grates and remove snow from building entrances to prevent flood damage or injury.”

An orange weather alert will also be in effect for Faxaflói Bay, the Westfjords, and the Central Highlands. Yellow weather alerts will apply to the rest of the country.

Route One closed between Reykjavík and South Iceland

In the lead up to the storm, the Icelandic Road Administration has announced that it has closed Route One from Reykjavík to South Iceland (the Hellisheiði segment). Mosfellsheiði toward Þingvallavatn has also be closed. The Road Administration advises that this is no weather for travelling.

For more information on road conditions, visit safetravel.is.

Four of Six Capital Area Mayors Not Up for Reelection

Big leadership changes will take place in the Reykjavík capital area in Iceland’s upcoming municipal elections. RÚV reports that four out of the six current mayors in the region will not be running. Municipal elections will be held across the country on May 14, 2022, and local and municipal council members in Iceland are now making up their minds on whether or not to run for another term. Both citizens of Iceland, as well as residents of Iceland who have lived in the country for five years or longer, can vote in municipal elections.

In the capital area, the mayors of Kópavogur (Ármann Kr. Ólafsson), Setjarnarnes (Ásgerður Halldórsdóttir), Garðabær (Gunnar Einarsson), and Mosfellsbær (Haraldur Sveinsson), have all announced that they will not be running in the May election. All four have been mayor in their respective municipality for over a decade, signalling a significant change of leadership for the region. Rekjavík Mayor Dagur B. Eggertsson announced earlier this month that he would be running for reelection, as will Rósa Guðbjartsdóttir, current mayor of Hafnarfjörður.

Foreign residents of Iceland who do not hold Icelandic citizenship but have lived in the country for five years or longer have the right to vote in municipal elections. Most information on voting requirements will be available as elections approach.