Iceland’s housing market has remained stable so far this year, according to the June report from the Housing and Construction Authority. (HMS).
Sales activity and price levels have stayed close to the ten-year average, though newly built flats are proving harder to sell than older properties.
Estate agents quoted in local media described the market as quiet in June. Many believe conditions currently favour buyers.
Room for renters?
Rental demand has picked up in recent months following a slower winter. Activity in the short-term rental market, which serves mainly tourists, is similar to last year — but is expected to rise this summer. Some analysts say demand could exceed levels seen in the past two years.
Net borrowing from banks remains low. In general, repayments on non-indexed mortgages are matching the amount borrowed through indexed loans.
Construction, Pensions, & Employment
Pension funds, however, have seen a notable increase in lending. These institutions typically offer lower interest rates than banks. Meanwhile, households appear financially resilient, with deposits growing faster than disposable income.
On the construction side, investment in residential housing rose by nearly 20% in real terms last year, following a decline in 2023. While hiring has slowed in 2025, the industry is still employing 5.4% more people than in 2024.
Source: Icelandreview.com
