Collective home buying could lower Iceland property prices

A new approach to buying homes could strengthen buyers’ negotiating power and reduce prices, mbl.is reported, after the model was presented at a meeting of Iceland’s Housing, Construction and Planning Authority on Thursday.

The collective-buying model brings together people interested in purchasing homes, allowing them to negotiate volume discounts. The meeting highlighted an oversupply of apartments as a defining feature of Iceland’s housing market.

Halldór Kristján Sigurðsson, a real estate agent and founder of Fjöldakaup, presented the approach. The model, which is well known abroad, combines buyers’ purchasing power and demand to secure terms from sellers that would otherwise be unavailable to individuals.

Sellers can also benefit by handing over several apartments at once, rather than selling them individually over a longer period and saving related costs.

“This has become a reality. We have sold apartments through this model and managed to lower the prices,” Halldór told mbl.is. He said around 400 people are currently registered on Fjöldakaup’s list.

Halldór rejected the idea that financial institutions in Iceland control property prices. “It is entirely in the hands of the developers to name the price,” he said.

He said rental companies had received discounts of up to 10 percent on apartments in new developments. A large inventory of unsold apartments, both new and older, was gradually strengthening buyers’ negotiating position and increasing pressure on developers, he said.

It is now common for apartments to be offered below their asking prices, including prices set for properties last year, Halldór said.

Fjöldakaup has so far secured discounts of around 7 percent on apartments sold through the model. Halldór said he was optimistic about its future and expected the discount to increase.