According to research from global estate agents Knight Frank, Iceland saw the largest increase in property prices in the year to March 2017.
House prices in Iceland increased by an impressive 17.8%, putting it at the top of the latest property price growth table. The lack of new homes being built in Iceland has been cited as the reason for the dramatic rise.
“Iceland’s Housing Financing Fund suggests 9,000 new apartments need to be delivered over the next three years in Reykjavik alone to keep pace with demand,”
commented Kate Everett-Allen, head of international residential research at Knight Frank.
The total population of Iceland is 330,000, and 123,000 of them live in Reykjavik. Many housebuilders went out of business following the financial crash, meaning that the necessary new homes simply aren’t being built.
Analysts also believe that that the capital’s property market has been put under even more pressure due to homes being rented out on websites such as Airbnb. As a result, in January a law was passed stating that people renting their homes on the site for more than 90 days must obtain a special licence.
In 2016 Islandsbanki predicted that tourists would outnumber Icelanders by five to one this year, while the growth of hotel rooms has not kept up with this increase in visitors.
Knight Frank revealed that Iceland had higher property price growth than Hong Kong, New Zealand and Canada – all of which have had soaring prices in recent months, and where analysts are forecasting that markets may even be heading towards a bubble.
