There is a shortage of apartments in many places. In some municipalities there are no apartments for sale at all, in others they are selling in record time. Experts agree that more needs to be built, but the impact of the epidemic could delay it significantly.
There has been a major imbalance in the real estate market since the onset of the coronavirus epidemic. Cheap credit, wage increases and greater savings increased demand to such an extent that the Icelandic Central Bank tried to cool the market. Now the supply side is being tested and this does not only apply to the capital area.
Sold out apartments in Þorlákshöfn and no choice in Selfoss
Þorlákshöfn is perhaps a perfect example of the real estate market, as there is not a single residential property for sale here. Neither apartments in a block of flats, nor single-family houses. The area is also not slowing down, as nowhere in the country has property prices increased more than in Selfoss. There is a lot of construction and fast construction there.
“The situation is that everything that is produced and advertised is sold straight away. Several hundred new apartments are being built and we do not think that they will find owners very soon as soon as they are completed “ Says Helgi S. Haraldsson, chairman of the board of directors of Aalborg City Council. Even areas that were once unattractive have suddenly become hot in the marketplace. “For example, there is a lot of land demand in Eyrarbakki and Stokkseyri, which is good news.”
There is no property in Egilsstaðir
It’s fair to say that the real estate market in East Iceland favors sellers and buyers are out of luck. The price went up, as everywhere, not only in Egilsstaðir. There is a great demand for housing across the East, properties are sold as soon as they go on sale as the supply of real estate agents is weak, to say the least.
“There is no real estate on the sale list. Virtually no housing property, there are times when there are literally no housing available for purchase. We note that there are young people who come to the east of the country for work or simply because they want to. These people have nothing to choose from. There are also elderly people in the area who want to move to smaller apartments. There is simply nothing to choose from “ – says Sigurður Magnússon, real estate agent in Egilsstaðir.
Entire block sold in two days
The unfinished block in the Hagahverfi district of Akureyri is perhaps an example of the real estate market in the city. Real estate agents announced apartments for sale in the block on Wednesday, and the contractor accepted the offer for all 33 apartments on Friday. The most experienced real estate agents in Akureyri say they have never experienced such a phenomenon before.
Arnar Birgisson, a real estate agent in Eignaver, Akureyri, says he has never experienced such a huge shortfall. “There has been tremendous sales recently and especially in recent months. In the last 12 to 15 months, after the Central Bank cut interest rates, it was a huge phenomenon. If sales are high, we end up in shortages, everything is sold out. “
The same story is in the Vesturland area. In Akranes, the demand is huge and the construction of hundreds of apartments is still incomplete. In Ísafjörður, the barely listed houses for sale are sold immediately.
Covid could extend the housing shortage
Housing issues were discussed at today’s meeting of the Association of Businessmen and Economists. Its participants agree that the epidemic and its economic effects have created an imbalance in the market. More needs to be built, but an epidemic may delay that development. “There are some signs that more needs to be built in response to what can be called the changed situation that Covid has created that is in great demand. Whether or not demand remains the same, we may need to study the data in more detail to understand this phenomenon. But at least now there is a need for more housing, says Gunnar Jakobsson, responsible for financial stability.
Ásdís Kristjánsdóttir, deputy executive director of the Icelandic Employers’ Confederation, says the shortage of raw materials could delay essential development. “We hear that, for example, cement is lacking, and it is of course necessary for the construction of apartments. This can affect supply if we look at a few years or months ahead. This is one of the things we observe for the sake of covid. Production delays from abroad affect the domestic market ”.