Davíð M. Sigurðsson says there is a great demand for apartments in Naustabryggja.
Land prices have risen sharply in recent years, especially in central Reykjavík, where there is greater demand for land. Hannarr and the Confederation of Icelandic Industries (SI) estimate the cost of land prices at 20 percent of the total construction cost. Land prices therefore create pressure to raise housing prices. This is stated in Íslandsbanki’s new analysis of the housing market.
From 2003 to 2016, land prices in the capital area have risen from around 500 thousand to five to ten million ISK per apartment, or more than tenfold. At the same time, housing prices in the area have tripled. “On top of the rise in land prices, there are more fees that have also risen,” says Davíð M. Sigurðsson, marketing director of ÞG Verk. “Of course, this increase in land prices has an effect on housing prices, just as a rise in milk prices has raised yoghurt prices.”
In October, the formal sale of 163 ÞG Verk’s apartments at Naustabryggja began, but according to Davíð, the apartments are at a market-friendly price and are intended for young people and first-time buyers. Davíð says that the huge housing shortage that currently prevails is reflected in the demand for those apartments. “There are only two left and we have sold for 5.5 billion at a time. We will not be able to hold back from people who are begging us to buy. ”
Bjarni Már Gylfason, economist at the Confederation of Icelandic Industries.
“There is a very small supply of plots for contractors like us who are ready to go into the production of apartments at a missing price. We have also been building convenient apartments, such as at Garðatorg, but that market has become a bit saturated, “says Davíð, but he also believes that there is a need to change the zoning and building regulations in order to be able to offer affordable apartments.
David criticizes the allocation of plots to parties who do not build on them. “We think it is wrong to allocate plots to parties that do not build on, these will just be development projects and then the plot price increases by half. Then there is no possibility for parties like us to buy and build there. ”
Bjarni Már Gylfason, an economist at the Confederation of Icelandic Industries, agrees with Davíð’s statement that it is clear that land prices have risen sharply. However, it is difficult to measure the increase. “The basic driving force behind the plot increase is the lack of plots.
The focus in the capital area has been on densely populated areas. There are certain benefits to that. On the other hand, it is not in line with the idea of trying to reduce construction costs and the cost of housing, “says Bjarni.
“We see a small supply of municipal plots that offer cheaper housing. The requirements set by both the municipalities but also the building regulations and others are also narrow, people have to some extent been hesitant to start. One wonders whether it is a healthy position in the market that prices are pushing upwards just because of shortages, and that the shortage is to some extent only man-made, “says Bjarni Már Gylfason.