Signs of a cooling housing market

Þorvaldur Gissurarson, the  CEO of ÞG Verk, says that the housing market has cooled down in recent weeks. However, it is premature to draw too many conclusions based on the sales of the last few weeks. A real estate agent that Morgunblaðið spoke to said the same thing, that the market had been slowing down recently. He believed that the main explanation was that the banks had raised interest rates on indexed housing loans.

Article on Iceland Monitor

The Central Bank still keeps interest rates unchanged

Higher sales than expected

ÞG Verk sold around 130 apartments in the first half of the year. They had then sold 269 out of 295 apartments in three apartment buildings in Vogabyggð in Reykjavík, in Smárabyggð in Kópavogur, and in Urriðaholt in Garðabær. That corresponded to about 91% of the apartments that the company had ready for delivery at the time.

Exceeding expectations

Gissurarson says that demand from former residents of Grindavík has stimulated the market at the beginning of this year.

"Sales in the first half of the year were much better than we expected. There was a lot of inertia in the housing market last fall and little sales, but it picked up soon after these events on the Reykjanes peninsula. The momentum that hit the market lasted pretty well until late summer. However, we are now seeing a decline in sales. Still, it may not matter much. We have only a few unsold properties. We are almost sold out. So the next projects won't go on sale until next year."

He adds that ÞG Verk has sold ten apartments in the third quarter, which ends next Monday, but this is a significant decline from the first two quarters.