The real estate market is cooling

Una Jónsdóttir, sérfræðingur í húsnæðismarkaði hjá Landsbankanum.

Una Jónsdóttir, sérfræðingur í húsnæðismarkaði hjá Landsbankanum. mbl.is/Eggert Jóhannesson

"This means that the real estate market is cooling down," says Una Jónsdóttir, the Head of Landsbankinn Economical Research, about the 0.4 decrease in the housing price index in the capital region. She says that the decrease will probably lead to the inflation decreasing as well.

The housing price index was 946.9 in August and goes down 0.4 percent between months is reported in an announcement from HMS today. During the last three months the index went up 2.9%, in the last six months it went up 12.2% and over the last twelve months 23%.

Biggest decrease in three and a half years

This is the biggest decrease in the housing price index since February 2019, so the decrease is big news as such. However, Jónsdóttir warns against jumping to conclusions, but it is, however, clear that the real estate market is cooling down.

Reykjavík - Miðborg - Höfuðborgarsvæðið - hús - byggingar -

Reykjavík - Miðborg - Höfuðborgarsvæðið - hús - byggingar - Morgunblaðið/Sigurður Bogi

"This is important news because we have not seen this trend for a long time. We have seen increases from 2-3%, which was the case from February until June this year. Then suddenly we see the cooling of the market," she said to mbl.is.

The real estate market has slowed down

She adds that a cooler real estate market will result in less inflation.

"The inflation will decrease faster than we expected at the outset. This is very good news because rising prices in the real estate market is one of the biggest factors driving the inflation upwards. Now we will most likely see the inflation decrease."

"I think this is an indication that we will have a slower real estate market. There will be more supply on the market, and the properties will sit on the market for a longer time and prices will not rise as much as we have been seeing. This gives us an idea of the times ahead."

However, she does not want to speculate whether the real estate market will see decreases in prices in the coming months.

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