Southern Iceland Needs 5,500 New Homes in Next Decade
Southern Iceland faces a housing shortage with 5,500 new homes needed in the next decade. Population growth continues as housing remains more affordable than in Reykjavík, though high interest rates have slowed construction activity recently.
Southern Iceland requires 5,500 new homes over the next ten years. Population growth continues to accelerate in the region. Housing prices remain much lower than in the capital area according to housing specialists.
Experts from Iceland's Housing and Construction Authority presented these findings this week. They held an open meeting about housing market development in Selfoss, Southern Iceland's main town.
Jón Örn Gunnarsson, a housing planning specialist, addressed current conditions. "The situation in Southern Iceland is quite good," he stated. "Construction is keeping pace with housing needs relative to population growth. Given challenging market conditions, I'd say it's tolerable here in Southern Iceland."
Why is construction slowing despite growing demand? High interest rates have caused a natural reduction in building activity. Historical data shows more construction was underway two years ago. Specialists hope conditions will improve as interest rates stabilize.
Southern Iceland's affordability compared to Reykjavík continues to attract new residents. The region offers more accessible housing options for families and young professionals. This migration pattern creates both opportunities and infrastructure challenges for local municipalities.
Realistic planning must account for economic fluctuations while addressing genuine housing needs. The current slowdown reflects broader economic pressures rather than diminished demand.