The cost of rent in Reykjavík is higher than in the capital cities in Iceland’s neighbouring countries, the Housing Financing Fund (HFF) reported. A one-bedroom flat costs, on average, ISK190,000 per month ($1,700), which is far above the average rent for other Nordic countries.
The high cost of rent in Reykjavík isn’t divorced from the housing shortage that’s been widely recognized in Iceland. 17,000 apartments are needed in Iceland by the end of 2019, according to a report earlier this year by HFF, and that pushes up inflation, as does the glutted Airbnb market in the country. In the Icelandic government’s 2019 budget bill, over ISK900 million ($7.9 million) was allocated for housing, to be divided between housing benefits for low earners, public housing construction, and tax credits for first-time homebuyers.
Student Housing too Pricey
Around 1,179 students are on a waiting list for student housing in Reykjavík, which is one of the lowest cost options for the city’s residents. But the going price for a studio apartment in student housing developments is still a whopping ISK96.668 ($867), which is difficult for foreign students to handle, particularly those that are only legally permitted to work 15 hours per week.
Cheaper to Buy, if You Can
The cost of purchasing a home in Reykjavík is lower than in most of the Nordics and considerably lower than rent in Reykjaviík. Apartment owners pay considerably less than renters, and their monthly salaries are high relative to their monthly payments, meaning that it’s more cost-efficient for individuals to purchase when possible.
But, as with many other places, it’s difficult to scrape together the money for a downpayment on an apartment or house when you’re rent takes up nearly 50% of your take-home pay.
In Iceland, 14% of individuals between the ages 25 and 34 live with their parents or relatives because of the high rent, whereas those in Nordic countries tend to move out of the house much earlier—only 6% of that demographic live at home.