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Iceland is a country that can hardly compare to any other around the globe. The impressive landscapes, the uniqueness of its culture and the wild nature has attracted millions of tourist every year. However, some temporary visitors fell in love with Iceland to a certain degree, that many decided to move to Iceland permanently. Before taking such an important decision, it is essential to know Iceland's real state and housing status. After all, having a place to stay is the first step when moving out, isn't it?
Every country has its own rules and requisites when it comes to buying a house. In this article, we would like to introduce you to the process of purchasing a property in Iceland, the documents required, and the average prices of houses in Iceland. Today we will not talk about car rentals in Reykjavik but about purchasing properties in Iceland! If you are thinking about living in the land of fire and ice, then stick around.
Rental prices in Iceland
As of 2020, the average renting price for a 3-bedroom apartment in Reykjavik is 319.000 ISK or USD 2500 approximately. If you live in a big city, this price may not even surprise you, maybe it is quite similar to the costs of your city as well. But do remember we are talking about a town whose population is 122,853 inhabitants. That would easily be considered a village somewhere else.
The same 3-bedroom apartment in Hafnarfjordur, 6 miles away from Reykjavik, has an average price for renting of approximately 240.000 ISK or USD 1900. And of course, the further, the cheaper.
Housing prices in Iceland
Let's now dig a bit more into the cost of buying a house in Iceland.
In 2022, the average price for a single-flat home in Reykjavík rose by 5.5%. The current price for residential property in Reykjavík is 529.372 ISK or USD 4000 per square meter. Despite this, In May and June 2020, the real estate market broke records. Mortgage transactions increased to 50% compared to the same period in 2019 thanks to low-interest rates in lows that encouraged buyers even in times of a coronavirus.
I can undoubtedly say that the major problem one can encounter when moving to Iceland is the housing prices. The country is currently undergoing a real estate bubble influenced by many factors, but one of them is the increasing number of tourists that visit the island every year. Do bear in mind that prices vary greatly depending on the property itself and the location. Reykjavik's housing prices, the capital of Iceland, are much higher compared to a similar property somewhere else.
It does not matter if you are looking for rental houses or to buy one, as you can see, the prices are just exorbitant in both cases. Under such circumstances, if you really want to move to Iceland permanently, then buying a house would be a much more sensible option in our humble opinion.
Buying real estate in Iceland Requisites
When buying real estate in Iceland, we need to differentiate between private individuals and companies. We will focus on private individuals. If you wish to buy a property for yourself as a private person, you must have Icelandic citizenship or have been a legal resident in Iceland for at least five years.
If you are not an EEA (European Economic Area) national and do not reside in Iceland, you require an exception from the Minister of Justice to own a house in Iceland, the application form can be filled out online; they are available at the bottom of this government webpage. In the case you already meet the fore mention requisites, you can then move onto the next steps: how much you can afford, credit score, and choosing your mortgage.
Mortgages in Iceland
This can be a somewhat complicated topic as mortgages work differently in most countries. However, we will do our best to provide simplified information that can give you a general idea of the types of mortgages in Iceland.
Like in any other country, being granted a mortgage depends on your credit score and financial stability. The bank then analyzes every profile, but you should also check which option can be more beneficial. Every mortgage comes with associated fees but works differently depending on the rules of the loan.
Most common mortgage fees in Iceland:
- The standard mortgage fee of 59.000 ISK or USD 500. If you are a first-time buyer, then you do not need to pay this fee.
- Registration fee
- Mortgage issuance fee
- Credit evaluation fee
- Lien check fee
- Loan overview fee
In Iceland, we can find three main types of mortgage:
- Non-Indexed mortgage: with this option, your mortgage's full cost is paid in your monthly payment. Therefore, that payment is higher, but you will pay off the total amount in less time.
- Indexed mortgage: financing costs are added to the principal amount; the payments are initially lower, but you will also pay the whole load at a slower rate.
- Hybrid mortgage: you can divide your load amount into two loan parts adapted to your needs.
Regardless of the type of mortgage you choose, you can also select a variable or fixed interested rate. Loan periods in Iceland are between 5-40 years, at the choice of the borrower.
Iceland real estate for sale - where can I find properties?
Once you have made your numbers, learn how mortgages work in Iceland, the next expected step is to find Iceland real estate for sale you can purchase. A great option is to check online; there are several sites with great listings and information you can review. Many of them come with the agent's email and phone number in case you wish to require further information. The most well-known websites for real estate listings in Iceland are:
Real Estate agents in Iceland
If you prefer to do things the classical way, you can also visit a real estate agent in Iceland. Here you have a list of some companies you can contact and arrange an appointment with:
Lind fasteignasala ehf.
lind@fastlind.is
Bæjarlind 4, 201 Kópavogur
Phone: 5107900
Heimili
heimil@heimili.is
Grensásvegur 3, 2nd floor108 Reykjavík
Phone: 5306500
Ace real estate agents
as@as.is
Fjarðargata 17, 220 Hafnarfjörður
Phone: 5202600
Iceland real estate: A Guide for Moving to Iceland
Buying a house is a crucial decision's in someone's life. Whether you are a first-time buyer or not, you still need to consider several things: job security, down payment, duration of stay, etc. Homeownership provides stability, but it needs to be done the proper way. If you are foreign that want to move to Iceland, we hope you find the house of your dreams in this magical and welcoming country!
