I'm a passionate traveler and always intrigued by the real estate world. Two weeks ago, I was in Iceland and I've got to say, this country is one of a kind. On top of that, I took the opportunity to learn more about how real estate works there. Here's a bit about Iceland, the land of fire and ice, and how different and unique their housing market is.
Rent vs. Owning a Home
Most people in Iceland would prefer to own their property instead of renting. About 80% of Icelanders own their housing, and that's a higher number compared to the US, which is at a bit over 60%.
Mortgage and Financing
While mortgage is relatively easy, the Icelandic system requires a person to be financially viable just like in the US. A minimum of 15% downpayment in cash is required to proceed and borrow about 80-85% depending on your financial situation.
Pricing and Interest Rates
A condo around 90-100 square meters is at around kr 500,000 per square meter, which is quite expensive. There are two financing systems -- a simple fixed interest rate, and another one that corrects your payment according to inflation before adding the interest rate, which sounds complicated. The second system is created to help the banks not to lose money, which is a response to the 2008 financial crisis. Comparing the Icelandic financial system, it's more complicated than the usual black-and-white financing in the US which is pretty straightforward.
Speaking of inflation, the inflation rate in Iceland is at around 3-4% at a 10-year data which is not bad compared to other European countries. Europe aims to stay within the 3% inflation rate and is doing quite well over the past 10 years.
With that in mind, banks are getting the help they need to keep up with the economy, and inflation rate is keeping up in Iceland so far. Overall, aside from the beautiful scenery and an awesome culture it offers, Iceland has its unique financing system and they're hoping for the best.
Want to see my journey to Iceland? Check them out and give me a follow on Instagram: instagram.com/varealestate. Thinking about selling your property today? Let's talk -- 703-625-4949 or email at firstname.lastname@example.org. Make your move today!