Sluggish sales and falling prices characterize the current market scenario
The Icelandic real estate market is currently experiencing a buyer's market, as indicated by a survey conducted by the Housing and Construction Authority (HMS) on July 2, 2025. The survey was sent to 330 members of the Association of Real Estate Agents, with 99 responses received, representing a 30 percent response rate.
The survey results suggest a continued slump in the real estate market in Reykjavík, given the low market activity and the consensus among agents that it is a buyer's market. A staggering 65 percent of respondents believe that market activity in Reykjavík is low or very low.
The current trends in the Icelandic real estate market are primarily driven by slowed sales activity, price drops, and a significant supply of unsold new apartments, especially in the capital area. Used apartments, particularly lower-priced ones, are selling faster than new developments, where approximately 1,400 new units remain unsold in the Reykjavik region.
The buyer's market trend has strengthened since May 2025, with 94% of surveyed agents focusing on properties in the capital area and surrounding neighborhoods. This inventory surplus and subdued buyer interest contribute to price drops and increased negotiating power for buyers in Iceland’s real estate market.
The unsold apartments in Reykjavík are worth over 20 billion ISK, according to the context of the article. Despite being a typically active season, 65% of real estate agents report low market activity.
It is worth noting that the immediate market dynamics contrast with the broader long-term outlook, where Iceland’s real estate remains attractive due to strong economic fundamentals, rising tourism, and growing foreign investment interest, particularly in urban centers like Reykjavik. However, the present oversupply and reduced demand have created a buyer's market in the short term.
In summary, the Homes and Construction Authority's July 2025 survey reveals that the Icelandic real estate market is characterized by:
- Low market activity (65% of agents reporting decline)
- Price decreases
- A high inventory of new unsold apartments (~1,400 units in the capital area)
- Quicker sales of used, lower-priced apartments over new developments
- Stronger buyer’s market conditions since May 2025
- Concentration of activity in the capital region.
References:
[1] https://www.youtube.com/watch?v=26tjb8Nx8WA [2] https://icelandmonitor.mbl.is/news/news/2025/07/30/buyer_s_market_price_drops_and_slower_sales/ [3] https://european.realestate/country/iceland/
The current slump in the real estate market in Reykjavík may present opportunities for investors, given the overabundance of unsold apartments and continued price drops. With 65% of real estate agents reporting low market activity and an inventory surplus of approximately 1,400 new units, potential investors might find real-estate finance solutions attractive.
news, finance, investing, real-estateThe ongoing buyer's market conditions in Iceland's real estate, particularly in urban centers like Reykjavik, could prompt increased foreign investment interest. Given the strong economic fundamentals, rising tourism, and the present oversupply, the market might offer favorable conditions for investors, offering a blend of finance and real-estate opportunities.
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