Home prices in Iceland are rising rapidly1!

Trend: house prices in Q3 2018 up 2.2 percent y-o-y

During the year ended Q3 2018, national house prices in Iceland increased by just 2.2 per cent, down sharply from 18.76 per cent y-o-y in the same period last year. Housing prices increased by 1.25 percent in Q3 2018 quarter-on-quarter. rent cars

From 2002 to 2007, Iceland saw the housing boom with house prices rising by over 73 percent. However, from early 2008 to 2010 house prices plummeted by 32,5% due to Iceland's extreme exposure to the global crisis. In the next three years, the housing market was quiet, with house prices rising by 5%. In 2014, Iceland then experienced strong domestic price increases of 5.22%, 6.89% in 2015, 12.55% in 2016, and 12.89% over 2017, attributable to strong demand and a reduced supply of housing, notably in the capital city of Reykjavik.

Iceland's continued increase in demand for property is driven by booming tourism. According to the Icelandic Tourism Board, foreign visitor arrivals rose by 24.2 percent to some 2.2 million in 2017. The majority of tourists come from the U.S. (26.3%), the UK (14.7%), Germany (7.1%), Canada (4.7%), France (4.6%) and China (3.9 percent ).

Tha2 1 million foreign visitors visited Iceland through Keflavik Airport over the first ten months of 2018, up 565 percent over the same period last year. It is anticipated that about 2.3 million tourists will visit Iceland this year.

Rent: no reliable data returns

Recent news: Iceland's forecast for 2018 economic growth has recently been revised to 3.8%, but still slowed from 4% in 2017, 7.2% in 2016 and 4.2% in 2015 as the economy approaches full capability, based on figures published by the Icelandic Statistics Group. In November 2018, in the face of increased inflationary pressures, the Central Bank of Iceland has raised its key rate unpredictably by 25 basis points to 4.25%.

Offer 7-year fixed contracts to renters

A major leasing company now offers seven-year fixed-price contracts to Reykjavík tenants, reports RÚV. Almenna leigufèlagið, which manages approximately 1,200 rental properties in Reykjavík and elsewhere in the country, now offers renters a new kind of fixed rental contract, which is tied to the consumer price index only.

The new lease type is sold under the Alma trademark. The tenant has unilateral right to extend the agreement for another year, while contracts are signed for one year at a time. Tenants may extend the contract for a total of seven years six times.

The high housing cost, particularly for renters, was a key issue in continuous wage negotiations between the unions and the Icelandic Business Confederation (SA). Almenna leigufelagið recently revoked a planned rent increase after a meeting with VR Union. Már Guðmundsson, the governor of the Iceland Central Bank, warns against a new video that excessive pay rises would inevitably lead to higher interest rates and unemployment. His words will fill some of the syndical leaders who are working to do that now.

The bank revealed this morning its plans to keep official interest rates as they were. "We now face economic challenges because of a shrinking tourism industry," said Mar. "More companies are aimed at reducing their staff rather than increasing them and inflation is expected to increase because the Icelandic króna value decreases."

"The good news is that inflation forecasts have decreased slightly shortly after a rise just before Christmas, with the Central Bank increasing its real interest rates."

Then Marr appeared to turn his words over to the union leaders saying that "the opposing forces influenced our decision to refrain from changing the official interest rate." Strikes and raises of pay over our capacity would be just such a blow. This would lead to higher interest rates and unemployment. Let's try to make sure it isn't."

When asked about the current redundancy at Reykjavík apartments, Már said that a refreshment in the housing market is expected after an upturn in recent years, reports RÚV. "At the moment, I'm not that worried. We always expected things to slow down, possibly lower the high exchange rate of the crown and, in turn, lower housing prices. This has happened."

 

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