The supply of apartments for sale rising
More older apartments are on the market now than newer ones. Morgunblaðið/Sigurður Bogi
The supply of apartments for sale in the Reykjavík area has gone up 45% in just one month. Now there are 1,013 apartments for sale in the area, but at the end of July there were only 700 for sale.The lowest supply was at the beginning of February when there were only 437 apartments for sale.
This is the first time since the spring of 2021 that more than 1,000 apartments are listed for sale, but in may of 2020 there were 2,200 apartments listed for sale in the capital region of Iceland according to HMS.
The rise in supply seems to be mostly because of more older apartments are going on the market, but the trend is slower when it comes to newly built apartments. Now there are 151 new apartments for sale but when the supply was down the number went down to only 57 apartments.
Dwindling sales due to less demand
The fact that there are more apartments on the market cannot be explained by a rise in the actual supply of apartments, but rather because there is less demand. About half of the apartments for sale in the capital region is listed at 75 million ISK or more.
The supply of single family homes has gone up in a similar way as the apartments, both this month and since the supply was at its lowest. However, the lowest supply point for single family homes was not until April this year, whereas the lowest point of supply for apartments was at the beginning of February.
In nearby municipalities there are 409 apartments for sale, but they were 323 earlier this month and only just over 200 at the beginning of May. Elsewhere in Iceland there are 371 apartments for sale, but the supply has not grown as fast as in the capital region.
The high cost of borrowing money in today's market might be the main reason the real estate market is cooling. According to the Central Bank the tide might be turning, because the inflation went down to 9.7% this month, from 9.9% in July.
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