Realtor advises homeowners to sell before buying

Real estate agent Páll Pálsson advises homeowners to sell their current property before buying another, mbl.is reports. He said this increases the chances that an offer will be accepted because it does not depend on the sale of another property.

“There is life in the real estate market, and it may be possible to describe it as a market in perfect balance between buyers and sellers, apart from the market for new construction,” Pálsson said in an interview on mbl.is’s Dagmál programme.

About 6,000 purchase agreements are signed in Iceland each year, equivalent to around 25 sales a day. First-time buyers account for 36% of all buyers, or around 300 purchase agreements every month, he said. They are important because they drive the market forward.

Pálsson said chains of property transactions, combined with high interest rates, were slowing activity, particularly in new construction. He described long sales processes involving such chains as, in many respects, a cultural phenomenon that emerged around the turn of the century and is specific to Iceland.

He also said there was strong demand for smaller detached or semi-detached homes measuring 100 to 150 square metres. This was especially true among older people who wanted to downsize without moving into an apartment building. Municipalities in the capital region should take this into account when planning neighbourhoods in the coming years, he said.

Pálsson criticised land prices in the capital region, saying municipalities charged too much in land prices, road construction fees and infrastructure fees. These costs could amount to as much as 20% of the sale price of new homes, he said.

“Municipalities should not need to rely on land sales to operate, and that is an indication that something is wrong with their finances,” Pálsson said, pointing to Ölfus municipality, which gives away plots to attract residents.