Reykjavik faces housing crisis with over 70% of building permits for unbuildable land plots

A significant portion of land in Reykjavik has remained undeveloped for several years. Nearly half of the plots with building rights in the capital have permits granted over five years ago, while over 70% of these properties are on plots deemed unbuildable.

Mayor Dagur B. Eggertsson of the Social Democratic Alliance has pointed out that high construction costs are delaying development projects. During a city council meeting, it was highlighted that 8,000 new apartments are needed to meet housing demands by 2027. The analysis revealed that nearly half of the building permits were approved more than five years ago and are associated with land plots still not ready for construction. Some of these plots are currently being used for active business activities.

Ragnhildur Alda M. Vilhjálmsdóttir, a council member from the Independence Party, noted that data indicates the reasons behind the slow pace of residential construction, with many approved land development plans being over five years old. Mayor Eggertsson stated the city is seeking clearer regulations that would allow it to impose restrictions on landowners.

Currently, there are over 58,000 apartments in Reykjavik, with 2,700 under construction. Building permits exist for around 5,500 plots, but more than 3,900 of these are still classified as unbuildable. This classification often occurs because necessary infrastructure improvements have yet to be made. Eggertsson emphasized that while municipalities are making efforts to address the housing shortage, economic challenges are currently hindering progress. There are about 6,000 plots available for construction and 12,000 apartments approved in development plans, with additional projects in the pipeline.