Only one way ‒ increase the supply of housing

"It is safe to say that the housing market in Iceland is at a crossroads. The long-term shortage of apartments in this country has caused both rental and property prices to rise significantly. There is only one way to prevent rental and property prices from continuing to rise abnormally high as they have in recent years. That way is to increase the supply of housing. Here, the goals of the Minister of Infrastructure for increased housing construction and the measures that have been taken are an important contribution to that journey," said Ágúst Bjarni Garðarsson, Member of Parliament, during the parliamentary proceedings.

"However, it is the case that the housing market has significantly felt the actions of the Central Bank as it has become increasingly difficult for buyers to enter the market and financing for new projects has become much more expensive, contrary to what we need now. When everything is taken into consideration, this has a dampening effect on contractors to continue the work on apartments.

That said, I am fully aware of the line dance that this is in times of high interest rates and inflation, but the current situation will only lead to higher rent prices and increase pressure on very high property prices when the current situation ends. This is not beneficial to anyone, and in my opinion, it is clear that specific measures must be taken to untie the knot we are facing. Such measures could be taken through temporary and specific lending terms from financial companies to ensure necessary construction continues. With such, financial companies would, in my opinion, fulfill the responsibility that rests on them at this time. Additionally, I believe it is sensible to embark on necessary legislative changes to the investment permissions of pension funds, which would allow them to own more than 20% in a company that would handle property projects for pension funds and thereby strengthen us as a community in the endeavor to establish a reliable and healthy rental market in this country," said Ágúst Bjarni in conclusion.

Ágúst Bjarni's speech in its entirety at the Althingi:

"Honourable Speaker. It is safe to say that the housing market in Iceland is at a crossroads. The long-term shortage of apartments in this country has caused both rental and property prices to rise significantly. There is only one way to prevent rental and property prices from continuing to rise abnormally high as they have in recent years. That way is to increase the supply of housing. Here, the goals of the Minister of Infrastructure for increased housing construction and the measures that have been taken are an important contribution to that journey.

However, it is the case that the housing market has significantly felt the actions of the Central Bank as it has become increasingly difficult for buyers to enter the market and financing for new projects has become much more expensive, contrary to what we need now. When everything is taken into consideration, this has a dampening effect on contractors to continue the work on apartments.

That said, I am fully aware of the line dance that this is in times of high interest rates and inflation, but the current situation will only lead to higher rent prices and increase pressure on very high property prices when the current situation ends. This is not beneficial to anyone, and in my opinion, it is clear that specific measures must be taken to untie the knot we are facing. Such measures could be taken through temporary and specific lending terms from financial companies to ensure necessary construction continues. With such, financial companies would, in my opinion, fulfill the responsibility that rests on them at this time. Additionally, I believe it is sensible to embark on necessary legislative changes to the investment permissions of pension funds, which would allow them to own more than 20% in a company that would handle property projects for pension funds and thereby strengthen us as a community in the endeavor to establish a reliable and healthy rental market."