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Predictable shortages of new apartments and price increases in the cards

The Housing and Civil Engineering Agency, the Confederation of Icelandic Industries and the Association of Realtors say it is urgent to increase construction work, otherwise there is a risk of considerable increases in real estate prices. A record was set in turnover in the real estate market last year.

Only this year 1999 more purchase agreements were made than last year. This is stated in a new monthly report of the Housing and Institute of Civil Engineering. It is not ruled out that real estate prices may rise even more because the supply of properties has fallen sharply.

Karlotta Halldórsdóttir, an expert at the Housing and Civil Engineering Institute’s economics department, says that if the supply of new buildings does not increase much in the near future is continuing pressure on housing prices.

“There was a sharp contraction in new construction in the early stages of construction, which means that there will not be enough supply on the market. We believe that it needs to be built around 3. 000 new apartments in the country every year for the next ten years. But now there are only 2. 51 buildings in the early stages, “says Karlotta.

Little supply ahead

Kjartan Hallgeirsson, chairman of the Association of Realtors, is on the same page opinion.

“It is always the case that when there is more demand than supply, it leads to a rise in real estate prices. It is not surprising that this is reflected in the forecast. The situation, of course, is that there have always been either too many assets or too few. “Now the situation is that there is a small supply ahead but not maybe in the next few months so we can temporarily expect that there will be some shortage in the market that pushes prices, but then it should recover next year and next year,” says Kjartan.

Sigurður Hannesson, Executive Director of the Confederation of Icelandic Industries, says it is urgent to act.

“If this is not done now, there is a risk that we will run into significant problems in a few years’ time. . Because if the supply of flats will not increase, it can lead to nonsense in the real estate market, “says Sigurður.

It is urgent that the government and the private sector work together

Sigurður says that the public sector and the private sector need to work together on these issues.

“All parties need to be involved in solving the problem, the government when it comes to regulations and overviews, municipalities have in hand how much is built and where. There needs to be a change in processes and culture in some cases and the private sector itself needs to do what it can to speed up the development, “says Sigurður,

Karlotta at the Housing and Civil Engineering Agency says the agency works in this direction .

“We at the Housing and Civil Engineering Agency would like to coordinate these things better and have, for example, already talked to the municipalities. We want to work for more balance in this market, “she says.

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Registered purchase agreements for residential housing for the year are) % more than the year 731) or almost opposite) . .

. February

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