We often hear people say “why is Iceland so expensive?” since the cost of living in Iceland can feel quite high if you’re not ready for it. Anything from daily transportation to getting potatoes in the supermarket can get more expensive than you’re used to.
The only cheap things you can count on are heating, electricity, and water. Living expenses and some basics might be a tad cheaper for students, but the rest of us will have to pay normal prices.
Living in Iceland can feel like a dream to many people. The beautiful nature, secure society, and (of course) all the wonderful warm baths you find all over the island do sum up. But how is it really to live in Iceland? Is Iceland really that expensive? Read on to find out what you can count on if you ever decide to move to Iceland.
Currency and Misconception
Taking a look at just the digits of Icelandic prices doesn’t really do the country justice. The currency in Iceland is Islénsk Króna, or ISK, and it trades for about 0,007 USD per Króna.
This is good to know before we start talking prices. Because, even though some prices might feel like they are incredibly high, it doesn’t mean that the price itself is necessarily expensive.
But is Iceland in general expensive? Yes, definitely. Just take the currency into context when you look at any Iceland vacation cost.
Why is it Expensive to Live in Iceland?
Iceland has been at the top of the list of the most expensive countries in the world for quite some time. This, even though the government has tried to change the answer to the question “Is Iceland expensive?” to something less frightening than “Absolutely”.
Iceland is a remote nation with very few possibilities for domestic agriculture and production. Pair this with a strikingly high standard of living and an increasingly growing number of annual visitors to the island, and you have yourself a good mix of factors that will drive up the costs of just about anything.
To keep costs down, you can do the normal things. Such as, prepare your own meals, go to the thrift stores in Reykjavík, or simply look for more affordable accommodation.
Regardless of where you look in the world, you will see that any remote nation will have to import the majority of its consumer goods. Iceland is no exception, and as the demand for foreign goods is growing, so does the need and want for more imports.
Due to long and costly transports to the island, prices for the consumer goes up. This affects all products that can’t be produced in-country, which is a lot of products.
There are just over 370 000 people in Iceland, which is incredibly few compared to most developed countries. This modest number of people and the inability to ship raw materials at a reasonable price makes it impossible for them to maintain domestic production. Satisfying the nation’s demand then becomes a complicated task.
The country is striving to produce larger and larger portions of the goods and wares that they consume in the country. Regarding food and beverages, for example, the country is (at least right now) able to produce 65% of everything they consume. This means that they need to import the rest, which, as we’ve already discussed, doesn’t come cheap.
High Living Standards
Iceland may have expensive goods and wares, but there are some things this fantastic country has an abundance of: energy and water. The whole island is more or less a majestic geothermal source of energy.
The abundance of freshwater sources means that everyone has access to drinkable water. This drives the energy and water prices down in Iceland, making the living costs a little lower.
Iceland also has strong labor unions and very high wages, which in turn increases the costs of most goods and services in the country. Due to the high salaries, the cost of living doesn’t hit Icelandic inhabitants very hard, since they are set up to be able to pay for themselves.
The fact that over 85% of those of ages between 15 and 64 are employed further strengthens the domestic market, since most adults can be a part of it.
Renting in Iceland is like any place. It will cost you anything from ISK 160,000 (about $1150) per month for a studio of about 45 square meters. You'll also pay around ISK 360,000 (roughly $2600) per month for an 85 square meter apartment in a nicer neighborhood.
Add another ISK 30,000-60,000 (about $220 - $440) for monthly utilities, and you can understand why the wages are high.
Is Iceland expensive for those living in Iceland? Not very. Is Iceland expensive to visit? Only if you do it wrong.
Tourism and Market Competition
With a domestic market that is already not enough to satisfy Icelandic consumerism, another factor is added: tourism. With more people comes more competition, and some years, the number of people in Iceland triple during the high season for tourism.
This means that there are now even more people who want to buy whatever is sold, so sellers can hike the prices even more.
Is Food Expensive in Iceland?
If you have lived and worked in another country, you will definitely react to the food prices in Iceland. If you live and work in Iceland, however, chances are that you won’t have any issues paying for the food.
As with many aspects of the economy, salaries will often match the pricing. The longer you spend in a country, the more you also get to know the market and learn which foods are cheap and which are overpriced.
So, is food expensive in Iceland, or does the outside world only think so because it is compared to food prices in other countries? It depends on what you like to eat and drink.
If you’re a fan of potatoes, fish, sheep/lamb, and other domestic products, then you will be more than fine. If you like French wines and Brazilian steak, then you’ll have to increase your food budget.
As a reference to “is Iceland expensive” when it comes to food, here are some general prices for you. One kg of potatoes goes for roughly ISK 414 (about $3), a dozen eggs go for about ISK 720 (roughly $5.50), and a decent bottle of wine will be about ISK 7,711 (about $56).
Is Transport in Iceland Expensive?
In general, transportation will be expensive in most European countries. Iceland has a high fuel tax and is subjected to the long and costly transport of fuel to the island.
So, you will have to pay a few bucks more than you might be used to in other countries. This translates to both questions: “is it expensive to drive in Iceland?”, and “is Iceland expensive regarding public transport?”
Per liter, gas will go for around ISK 335, (or 2.50 USD), even though there will be variations between the different gas stations and regions on the island. We have a comprehensive article on comparing gas prices in Iceland that you should check out to get the most bang for your buck, regardless of if you live there or are simply visiting.
If you rather want to go by public transport, your only option will be traveling by bus, which will vary depending on where you are and how long you go. For example, in Akureyri, buses are free to use, while public transport in Reykjavík will come at a cost.
Is it Expensive to Live in Iceland as a Student?
Iceland has some outstanding universities and is happy to accommodate students from all countries, even if it is only for a semester or two.
Being a student often puts a strain on your budget, regardless of which country you study in. Knowing this, studying in one of the most expensive countries in the world might feel like an impossible task. There is a silver lining, though.
Even though you will have to pay tuition and registration fees for most universities in Iceland (some have no tuition), you will get a discount on accommodation. Other discounts apply to things like food, phone plans, and other basics as well.
The rest of the things will be on par with what non-students pay, so make sure to check out your advantages before you leave.
So, is Iceland expensive for international students? Not as expensive as for non-students, but still expensive by international standards.
How Much is a Trip to Iceland?
Before you go and decide to live in Iceland, you might want to check out the country first. A trip to Iceland is likely to be a good first step on your expat journey, just to see if it’s all it’s hyped up to be.
By going there on a holiday, you can get a taste of just how expensive is Iceland. If you do your research and play your cards right, you can easily go to Iceland on a budget and just scope things out. The flight ticket will unfortunately be anything from $100 - $500 depending on the season and where you fly from. Staying in Iceland can go from anywhere between $450 and $2,500 for a week, excluding flight tickets.
Take Control of Your Transport & Costs
If you want to add a little luxury to a holiday in Iceland, you should be able to take yourself wherever you want to go. Doing this requires you to rent a car in Iceland, which makes the section about gas prices important. We hope you enjoy your (possibly) costly stay in our beautiful island nation.