Nearly a fifth of people in Iceland who rent their homes spend more than 40 percent of their net income on housing – and are therefore classified as having burdensome housing costs.
At the same time as a growing number of renters are experiencing a financial squeeze, the number of homeowners considered to be living with burdensome costs is going down, according to a Statistics Iceland report.
On average, people in Iceland spent about 17 percent of their take-home income on housing last year, RÚV reports. The definition of housing costs used includes not only rent or mortgage payments, but also maintenance, insurance, electricity, heating and property taxes. The overall proportion of people’s pay spent on housing has remained relatively stable since 2006, but the burden has shifted significantly onto the shoulders of renters, instead of homeowners.
Around nine percent of people in Iceland live with burdensome housing costs, whereby more than 40 percent of their total take-home income goes on housing. The overall proportion of people suffering burdensome housing costs has gone down slightly over the last year. However, the proportion of renters in trouble has increased and now stands at 18 percent of people on the private rental market who spend over 40 percent of their wages on housing. That figure was just 9.4 percent in 2007.
14.5 percent of renters using housing associations or social housing now live with burdensome housing costs; up from 3.6 percent when the figure was at its lowest in 2006.
Conversely, the proportion of homeowners living with too-high housing costs is now at seven percent, but stood at 17 percent in 2006. The easing off is most evident among people with outstanding mortgages.
The worsening situation on the rental market is likely explained by rocketing rental prices, as demand remains higher than supply; while the financial crisis five years ago burst the Icelandic property bubble and eased pressure on house prices, temporarily.