Key Financial Indicators and Balance Sheet Analysis Q1 2023
Cooling, not freezing
The housing market is rapidly cooling,
largely due to the Central Bank's actions.
Not only has the Bank raised rates by 475
bps in the past twelve months, it has also
implemented borrower-based measures.
Still, the resilience of the housing market
has come as a surprise to many, with the
three-month price change turning positive
again in March.
One reason for the strong numbers could
be the fact that households have
responded to the rate hikes by increasingly
moving to inflation-indexed mortgages,
which have lower debt burden at the start
of the credit period.
Other important reason is population
growth. In 2022 the population of Iceland
increased by 3.1%, the largest increase
since 1734 (as far back as the records go).
Despite significant house price increases
households' debt position has been
developing favorably.
Sources: Central Bank of Iceland, Statistics
6
Iceland, HMS, Arion Research
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
30%
25%
20%
15%
10%
5%
0%
-5%
Jan-20
Housing price index in the Capital area
- % change
Mar-20
May-20
Jul-20
Sep-20
Nov-20
باللسسسلة
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
MoM
-Past 3 months
-Past 6 months
Past 12 months
Housing and population growth
- % change between years, 15-64 year old
2006
2007
2008
2009
2010
2011
-Population
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
-No. of dwellings
140
120
100
80
60
40
20
60
60
50
50
40
30
30
20
20
10
0
-10
-20
New mortgage loans less prepayments
- bn. ISK
2020
2021
2022
-Unindexed residential mortgage loans-Indexed residential mortgage loans
Private debt
-% of GDP
0
2013 2014 2015 2016
2017 2018 2019 2020 2021
2022
Iceland: Corporate debt
Iceland: Household debt
000
- Other Nordics: Corporate debt
- Other Nordics: Household debtView entire presentation