Iceland: Real estate market at crossroads

Housing prices will continue to rise over the coming years. The pace of these rises, however, will slow down considerably. High interest rates, tighter access to loans and a cooling labour market are the factors that will reduce demand. Supply, on the other hand, seems to have peaked and is likely to diminish over the next years – which should help stabilise real estate prices. A turn-around is expected in the market in 2009 when interest rates start to fall again and a new upward cycle begins in the economy.

To download this report visit Kaupthing Bank's website: http://www.kaupthing.com/lisalib/getfile.aspx?itemid=11919.

Author:
Asgeir Jonsson, head of the analysis department of Kaupthing Bank. asgeir.jonsson@kaupthing.com