But in the past few years, as developers raced to build new properties in and around the capital region, prices began to cool. The market took another hit last year when WOW Air, one of Iceland’s two main airlines, closed, damaging the tourism market.
In July 2019, the nationwide residential price index rose by about 4.2 percent over July 2018, marking its slowest growth in five years, according to Statistics Iceland.
Asdis Osk Valsdottir, managing director of Husaskjol Real Estate, said that before the pandemic, a house in Selfoss might sell for 40 million to 50 million kronur ($293,000 to $365,000), the same as a three-bedroom apartment in Reykjavik. According to the National Registry of Iceland, houses in the capital area currently cost between 80 million and 110 million kronur ($590,000-$800,000), while apartments go for 50 million to 64 million kronur ($365,000-$470,000).
When the first coronavirus case was confirmed in Iceland on Feb. 28, officials were already preparing an aggressive national program of testing, quarantining and contact tracing. The island nation, with about 360,000 residents, never fully shut down, though it did impose tight restrictions on large gatherings and certain industries.
As of Aug. 4, Iceland had reported just 1,915 Covid-19 cases and 10 deaths, according to the World Health Organization.
Despite the country’s success in controlling the virus, its tourism sector was further disrupted when the borders closed, which in turn threatened its housing market. With many foreigners currently unable to enter and many locals choosing not to travel abroad, more Icelanders are exploring the apartment and summer-home markets, both of which are now seeing an uptick in sales.