New Íslandsbanki housing market report
If Íslandsbanki Research’s forecasts are borne out, house prices will rise by just over 20% year-on-year in 2017 and just under 12% in 2018. The increase for 2019 is projected at just under 5%, on average. This is among the findings presented in the Bank’s new housing market report.
Among individuals with residential mortgages, the average loan-to-value (LTV) ratio was slightly over 42% as of end-2016, about half of the level in 2010. Debt has declined and house prices have risen, pushing LTV ratios downwards.
Developments in real wages are a key factor in house prices, as experience has shown that the ratio of housing costs to disposable income is relatively stable in the long run. Therefore, real wages will tend to support rather than hinder house price inflation.
The full report (in Icelandic) can be found here.