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Iceland Mag

Economy

Reykjavík real estate market cooling off: Prices in some neighborhoods have dropped

By Staff

  • Skólavörðuholt neighborhood Porperties in the old part of town are still highly sought after. Photo/Vilhelm

The rapid economic growth and boom in tourism in the past few years has fueled a rapid rise in housing prices in Reykjavík. Housing prices in the capital have increased by more than 50% since 2010. The latest figures on the housing market show that the market might have stabilized and might even be starting to cool off. Prices in the capital region increased by just 0.8% between September and October. Prices dropped in several neighborhoods.

Read more: Reykjavík real-estate market has finally made up losses suffered in 2008 crash

While the market is showing signs of slowing down prices are still rising more rapidly than the long germ average. The local business paper Viðskiptablaðið points out that real estate prices increased on average by 8.9% in the third quarter of this year, which is 0.4% above the 8.5% average quarterly increase since 1995. The average time it takes to sell an properties also continues to drop.

Signs that the market is slowing down
However, a new report from the government Housing Finance Fund shows that housing prices are increasing more slowly than they have been doing in recent years. Fewer properties are also being sold at more than asking prices than in recent months: 72% of properties were sold for less than asking price in September. 

The clearest sign that the market is showing signs it might  be beginning to slow down is that prices dropped between August and September in several neighborhoods. The largest drop was in postal code 109, where prices dropped by 5%. Prices in postal code 107, the old part of Reykjavík west of the downtown lake Tjörnin dropped by nearly 4%. At the same time several suburbs registered significant price increases of nearly 10%.

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