Kjarninn reports that Icelands are taking more mortgage loans and their home equity has doubled over the last five years. According to data published recently by Statistics Iceland. propertyfinder qatar
The combined home capital of Icelanders at end of last year amounted to ISK 4,034 billion [$29,031 million; €24,959 million], which is twice the figure of 2015. In total, 78% of Icelandic households' equity is immobilized.
The value of Icelanders' property has also grown dramatically in recent years. The total value of Icelander-owned real estate, according to the real estate evaluation (Fasteignamat), was ISK 2.353 billion [$16.933 million; €14.558 millions] at the end of 2010, compared to ISK 5.648 billion at the end of 2019 [$40.645 million; $34.944 million]. This is a 140 percent increase in total value. However, these evaluations are based only on the valuation value and not on the market value.
Housing loans are also increasing dramatically. At the end of 2019 the combined mortgage debt of Icelanders stood at ISK 1.614 billion [$11.615 million; € 9.985 million], an increase of 141 billion [$1.014 billion; €872,377 million] from last year. Housing loans have increased by ISK 352 billion since 2016, or 28% [$2.533 million; EUR2.178 million]. By contrast, loans granted by the nation's owners increased ISK just 56 billion between 2011 and 2016 [$403.004 million; €346.476 million], or 4.6%.
Despite the economic shocks this year, the trend of increased debt and higher real estate prices has continued. According to the recent Financial Stability Report (in English) of the Central Bank of Iceland (CBI), Iceland's total household debt amounted to almost 79% of GDP at the end of June, a percentage increase of just over 2% last year. The nation's debt has been in line with economic growth from 2016 to this year.
The report notes that "Household debt growth is driven by higher mortgage loans, while other debts have contract in real terms, as in recent years. Despite the uncertainty in the pipeline, domestic demand for mortgage loans remains solid due to decreased financing costs and stable real wages despite economic contraction. In July, net new household lending totaled almost 32 b.kr., about 80% above the average of 12 months."
However, the asset position of Icelandic households has improved. Home equity, which accounts for assets above debt, grew significantly last year and is now double that of GDP. Home equity was equal to GDP ten years ago.