Housing prices in the capital region, Reykjavík and the surrounding suburban municipalities, rose by 15.3% in 2016. This is the largest increase in real estate prices since 2007, when the pre-crash financial bubble crested. The price of apartments in multi family homes has also risen faster than the price of houses.The price of apartments in multi family homes has risen by 55% since January 2011, while that of houses has risen by a third.
Housing prices in the capital region have been rising since 2011. Prices fell in 2008, 2009 and 2010, following a massive increase in the pre-crash years. The record year was 2005 when prices rose by 35%. Last year's increases are therefore nowhere nearly as dramatic as those seen during the financial bubble.
Read more: Hotel construction boom threatens to exacerbate shortage of new housing
Economists at Landsbankinn bank argue in a new report (pdf) that the rise is driven by fundamentals, rather than speculation, pointing out that the demand for housing in the greater Reykjavík area has outstripped supply. New construction stopped in the years following the crash, and construction has since had trouble catching up with demand created by the booming tourism industry and strong economic growth since 2010. The economists at Landsbankinn expect the supply of new homes to increase in the next several months, relieving pressure on the market.
Housing prices in the capital region, Reykjavík and the surrounding suburban municipalities, rose by 15.3% in 2016. This is the largest increase in real estate prices since 2007, when the pre-crash financial bubble crested. The price of apartments in multi family homes has also risen faster than the price of houses.The price of apartments in multi family homes has risen by 55% since January 2011, while that of houses has risen by a third.
Housing prices in the capital region have been rising since 2011. Prices fell in 2008, 2009 and 2010, following a massive increase in the pre-crash years. The record year was 2005 when prices rose by 35%. Last year's increases are therefore nowhere nearly as dramatic as those seen during the financial bubble.
Read more: Hotel construction boom threatens to exacerbate shortage of new housing
Economists at Landsbankinn bank argue in a new report (pdf) that the rise is driven by fundamentals, rather than speculation, pointing out that the demand for housing in the greater Reykjavík area has outstripped supply. New construction stopped in the years following the crash, and construction has since had trouble catching up with demand created by the booming tourism industry and strong economic growth since 2010. The economists at Landsbankinn expect the supply of new homes to increase in the next several months, relieving pressure on the market.
