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Housing Prices Rise Fastest in Countryside

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Housing Prices Rise Fastest in Countryside

Siglufjörður

Siglufjörður, North Iceland.Photo: SBS.

Apartment prices are rising faster in Iceland’s countryside than in the Reykjavík capital area, RÚV reports. The data comes from the latest monthly report from the Housing Financing Fund (HFF). Apartment prices in Reykjavík and its surroundings rose 10.6 percent over the past 12 months, while they rose 22.2 percent outside the capital area.

Average rent in Iceland is ISK 2,000 (USD 20/EUR 16.5) per square metre and ISK 2,300 (USD 23/EUR 19) in the capital area. Those living within post code 101 (central Reykjavík) pay the highest average rent in Iceland. Outside the capital area, rent is highest in Akureyri, North Iceland.

Though last year the capital area showed a large increase in apartments sold above asking price, that number has stabilized in recent months at around 10 percent. Around 9 percent of apartments sold above asking price in February.

The rate of apartment construction outside the Reykjavík capital area has grown for the first time in 10 years. The number of apartments in construction in the country is above the long-term average for the first time since before the banking collapse.

Economist Ólafur Heiðar Helgason from the HFF says, however, that apartment construction has not been keeping pace with demand since 2013. The estimated cumulative shortage of apartments is expected to be 9,000 by the end of this year. Demographic trends, population growth, and the impact of Airbnb rentals are all factors in increased demand.

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