Looking for luxury condos? Cooling prices forecasted in Iceland

After price surge, slowing economy is forcing sellers to chop asking prices

National /
Feb.February 23, 2019 02:00 PM

Reykjavik (Credit: Getty, iStock)

Iceland may have recovered from a debilitating financial crisis, but now it faces a new problem: an increasing number of empty luxury apartments and a need for affordable housing.

A booming housing market and low mortgage rates have pushed up the prices of luxury property in cities like Reykjavik, Bloomberg reported, but now many units are being left empty as the economy cools.

The number of tourists expected to arrive this year is slated to drop nearly 3 percent while the country’s economic growth is forecasted to cool to 1.8 percent, the slowest pace in more than five years.

A recent report by Arion Bank, cited by Bloomberg, suggests the country’s housing market will follow suit with “expectations of increased supply” moderating price growth.

“We have lowered our prices and can’t lower them further, since the price is now lower than the cost of building,” architect Hildigunnur Haraldsdottir told the outlet on trying to move 15 units in her brand new luxury condo that have sat on the market for a year and counting.

The slowdown comes after the price of new luxury apartments in Iceland rose 17 percent between October 2017 and 2018, compared to a rise of 3 percent in general property prices over the same period, according to the report. Meanwhile, the Icelandic government recently released a report saying 8,000 homes are needed to fill the demand for affordable housing in the country.

In 2017, Iceland saw the largest growth in property prices of any country in the world, according to Knight Frank’s Global House Price Index. That year, property prices in the country rose by 15 percent, compared to an average global increase of 4.6 percent. [Bloomberg] – Decca Muldowney


Related Articles

arrow_forward_ios
(Illustration by The Real Deal with Getty)
Rising mortgage rates lock out homebuyers, trigger layoffs
Rising mortgage rates lock out homebuyers, trigger layoffs
United Kingdom Chancellor of the Exchequer Kwasi Kwarteng
Turmoil hits United Kingdom mortgage market
Turmoil hits United Kingdom mortgage market
 Lakeland Bank president Thomas Shara (Lakeland Bank, Illustration by The Real Deal with Getty)
In redlining case, New Jersey lender to pay $12M
In redlining case, New Jersey lender to pay $12M
(Illustration by The Real Deal with Getty)
Mortgage rates climb to 15-year high
Mortgage rates climb to 15-year high
Corcoran's Sheri Winter Parker and Compass' Elkin (Getty, Corcoran, Compass)
Cyberattack cripples Suffolk County real estate industry
Cyberattack cripples Suffolk County real estate industry
Lloyd and Barbara Macklowe with 51 West End Road (Getty, Douglas Elliman)
Macklowe Gallery founders chop another $10M off East Hampton home ask
Macklowe Gallery founders chop another $10M off East Hampton home ask
854 Fifth Avenue (Douglas Elliman)
Gilded Age mansion trades for $50M in all-cash deal
Gilded Age mansion trades for $50M in all-cash deal
Divvy Homes CEO Adena Hefets (LinkedIn, Illustration by The Real Deal with Getty)
Divvy Homes cuts 12% of staff
Divvy Homes cuts 12% of staff
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...