Construction of residential apartments in Iceland drops 16.8% compared to last year

The construction of residential apartments in Iceland has decreased significantly, with a reported 16.8% drop in the number of apartments being built compared to the same time last year, according to recent data from the Housing and Construction Authority (HMS). Currently, there are 7,221 apartments under construction nationwide, down from 8,683 in September 2023 and 7,937 in March of this year.

The decline in construction activity is particularly evident in the capital region, where there has been a total reduction of 536 apartments, reflecting a 9.7% decrease across all municipalities, except for Seltjarnarnes, where the number has remained stable. The most considerable decline was noted in Hafnarfjordur, with 185 fewer apartments, followed by Gardabaer, which saw the loss of 144 units. Reykjavik recorded a smaller decrease of 27 apartments.

As builders have initiated fewer projects, especially in the earlier stages of development prior to being weather-tight, this trend has raised concerns about a potential shortage of new housing. According to HMS, the emphasis appears to be shifting among contractors towards completing existing projects rather than starting new ones.

Forecasts suggest that around 3,024 apartments will be completed this year, maintaining earlier projections made in March. In subsequent years, the estimates drop to approximately 2,897 apartments in 2025 and 2,323 in 2026. However, these figures remain tentative, as upcoming projects may impact the final counts for 2026.