January Property Sales Up Sharply From Last Year
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Loading... - Adrien Gauthier
- 20 Mar 2025
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Iceland’s real estate market experienced a significant uptick in activity in January 2025, with a remarkable 30% increase in property sales compared to the same month in 2024. The Housing and Construction Authority (HMS) has noted this surge, although it also cautions about incomplete data in the rental market.
In January, over 700 purchase agreements were registered nationwide, marking a notable rise in real estate activity. While January typically sees lower sales compared to other months, this year’s figures represent a substantial increase from the previous year. However, the total remains slightly below January 2022 levels, when 750 agreements were recorded amid lower interest rates.
As the month progressed, real estate activity continued to gain momentum, with approximately 1,085 properties being removed from the market in February. The majority of these withdrawals occurred in the capital region (70%), followed by surrounding areas (17%) and other parts of the country (13%). The HMS has observed a strong correlation between the number of withdrawn listings and finalized purchase agreements in the subsequent month, indicating ongoing market strength.
Despite the positive trends in property sales, the HMS has raised concerns about the accuracy of rental market data. It estimates that up to 37,000 individuals may be undercounted due to broad exemptions from lease registration requirements. To address this issue, HMS has initiated efforts to enhance data collection regarding the housing conditions of foreign residents in Iceland, who are more likely to rent than own property.
In the lending market, there are signs of increasing demand for non-indexed loans, driven by lower interest rates. This trend is expected to further stimulate the real estate market as more buyers seek favorable financing options.
The construction sector is also responding positively, with 585 new residential units introduced in January and February, up from 425 during the same period last year. This increase aligns with the growing demand for housing, although last year’s municipal housing plans slightly overestimated the actual population growth by 2.6%. Municipalities had projected a need for nearly 4,200 units, while only 3,665 were fully completed and made available on the market.
The sharp rise in property sales in Iceland during January 2025 reflects a recovering real estate market, bolstered by lower interest rates and increasing demand for housing. However, the HMS's concerns about incomplete rental market data highlight the need for improved data collection to better understand the housing landscape, particularly for foreign residents. As the market continues to evolve, monitoring these trends will be crucial for stakeholders in the Icelandic real estate sector.
