To break the stagnation in the housing market

The stagnation in the housing market in rural Iceland is and has been a persistent problem in many regions of the country over the past decades and has hindered job creation and normal social development.

Breaking this stagnation is a pressing and major regional project that calls for multifaceted government actions.

At the start of the parliamentary term, we prioritised housing issues in rural Iceland. The government agreement states that efforts should be made to strengthen and increase balance in the housing market, regardless of residence.

In a report from the Economic Department of the Icelandic Housing and Construction Authority (HMS) on the development of the housing market outside the southwest corner, which was published recently, the obvious is confirmed, i.e., that stagnation has prevailed in the housing market of many regions. The same report also reviews the reasons why development in rural Iceland has been minimal compared to the capital area.

„The main reasons can be traced to the fact that in many parts of rural Iceland, the selling price of properties does not cover construction costs, the marketability of properties is less, and there has been a population decline in some municipalities leading to reduced demand. At the same time, there has been an increase in other municipalities creating a housing shortage. Financial institutions have shown less interest in lending for home purchases and residential development in rural Iceland,“ according to the report.

The measures we have taken during this parliamentary term under the leadership of Framsókn address precisely these aspects and tackle the root of the problem. These are special rural loans, capital grants, and regional grants, shared loans, collaboration with the public rental company Bríet, and pilot projects by HMS in cooperation with municipalities. Recently, Ásmundur Einar, the Minister of Social and Children’s Affairs, introduced a new project, Tryggð Byggð, which is a collaborative platform for all those involved in housing issues in rural Iceland.

The project's website clearly shows that the results of these actions have been significant, with construction underway on over 400 apartments in 34 municipalities, and total investment approaching 10 billion króna.

The information on the website can be useful for anyone considering building housing in rural Iceland in their search for solutions and models. It is important that we continue along this path into the future and ensure access to diverse and suitable housing options, regardless of residence.

Líneik Anna Sævarsdóttir, MP for the Progressive Party in Northeast Constituency.

The article first appeared on visir.is on 25 March 2021.