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Moving to Iceland? This is how much it will cost you

If you’re considering relocating to Iceland, you’re not alone. The country has become a popular choice for tourists and expats alike in recent years, and there are lots of things attracting people to this northern haven.

Although it suffered a lot during the 2008 crash, Iceland bounced back impressively. Its economy has since gone from strength to strength, largely due to the tourism sector, and unemployment rates sit as low as 1%. It’s also an incredibly safe country to live in, as is common in Scandinavia. Crime rates and drug use are low compared to most European countries, and more than 95% of the police force is unarmed.

Moving to Iceland: reasons for living in Iceland

It’s likely that your first thought is to move to the country’s capital, Reykjavik (two-thirds of the country’s population live here). This city has a great social scene and nightlife, with lots of bars, restaurants, and clubs to choose from, and many open until 5 am. The country as a whole is filled with amazing natural sights, from waterfalls and glaciers to the famous Northern Lights. Even from the capital, you can see incredible mountains surrounding you.

Northern Lights

If you like chasing the sun, then summer in Iceland is like a dream. Sunlight hours last almost all day and it never really gets fully dark. On the other hand, the winter can be bleak if you’re not used to long hours of cold and darkness. But the hot springs and pools are there to warm you up on cold winter’s days.

Iceland is also a forward-thinking country that really values equality. As an example, strip clubs were banned in Iceland as they were seen as anti-feminist. In our study of the best cities for the LGBT community, Reykjavik was placed 38th out of the top 100. It especially scored well when it came to LGBT rights and safety for members of the LGBT community.

Why is the cost of living in Iceland so high?

People certainly aren’t drawn to Iceland for its low cost of living. In fact, based on current data from Numbeo (at the time of writing), Iceland ranks as the second most expensive country to live in globally, dropping one place to third when rent is also considered.

So, why is the cost of living in Iceland so high? It’s partially due to its location. Because Iceland is so geographically isolated, it is more expensive to import products, meaning the prices for customers go up as a result. Iceland is also a small country, so it can’t manufacture as much of its own products compared to larger countries. Plus, the cold climate limits what fresh produce can be grown there, such as fruit and vegetables, so a lot of food must be imported into the country.

Ice

Taxes are also relatively high in Iceland. High VAT rates increase the price of products and food, although VAT on food is much lower than on other products. Since income tax is also high, this drives up the cost of labour, which also has to be made up for by increased prices in many situations.

The cost of buying or renting a home in Iceland is also pretty high. The housing and rental markets are very competitive at the moment. Iceland is a small country that has experienced a large influx of tourists and expats in recent years, which has dramatically increased demand for accommodation, driving up Iceland prices accordingly.

Cost of living in Iceland at a glance

Here’s some more information about the cost of various necessities when living in Iceland…

Housing costs

We’ve already mentioned that the housing market is competitive, but how much would it cost you to buy your own home in Iceland? According to Numbeo’s figures, the price of buying an apartment in the city centre of Reykjavik is around 568,000 Icelandic krona (ISK) per square metre, which equates to more than €4,000 per square metre. In 2017, this put the average house price in Iceland at between 40-50 million ISK, which is upwards of €300,000.

Of course, where you look for housing will change the price. More rural towns and villages will likely be cheaper than in Reykjavik, but then you’ll have less access to good jobs and local amenities available in the city. Houses and apartments in Downtown Reykjavik, particularly Miðbær, are highly sought after and, therefore, usually more expensive. Areas like Austurbær and Laugardalur to the east and northeast of Downtown will be slightly more affordable for housing.  

Housing in Iceland

Rent

If you’re not looking to buy yet, then you’ll still have to face the fiercely competitive rental market. Try to look before you move and don’t hesitate if you see a place that you like – someone else might move faster than you. The average rent for a one-bedroom apartment in the city is around 190,000 ISK, or approximately €1,400. If you’re moving with family, then you can find a larger home outside of the city centre for around €1,750.

Of course, there are cheaper options, especially if you’re moving alone or as a couple. You can rent a single room in shared accommodation for somewhere between €700-€1,000 per month. Or a studio apartment in a non-expensive area will cost you around €1,200 per month according to Expatistan. You can also save money through rent benefits. This comes after you’ve lived in Reykjavik for six months and acquire your own social security number in Iceland. If you qualify, payments can be made directly to your landlord or into your bank account to offset your rent prices based on your income and other factors. Learn more about Reykjavik’s rent benefits here.

You can find a variety of short-term and long-term apartments to rent in Reykjavik with us on Nestpick.

Utilities

While rent might not be the cheapest around, this is partially made up for by the price of utilities, which may or may not be included in your rent costs. Thanks to all the natural wonders in Iceland, notably volcanoes and geysers, the country harnesses a lot of its energy from geothermal sources and hydropower. In fact, 85% of Iceland’s energy comes from clean, renewable sources.

As well as this being amazingly environmentally friendly, it also makes it cheaper. The average Iceland prices for utilities for an 85 m2 apartment range from €90-€125, depending on your usage. If you’re sharing a house or apartment with others, then the price of your bills could be really low.

Transportation

Reykjavik is a fairly small city, so walking to and from places is usually a good option. But if you prefer taking public transport around the city or in and out of it, let’s look at some of the typical costs. All of Iceland’s public transport system relies on buses, which are very efficient and reliable. A single journey will cost you 460 ISK, or approximately €3.40. If you plan on travelling by bus regularly, then you might save money by purchasing a monthly pass, costing around €80-€90. Or, if you prefer to use a taxi around the city, then the basic tariff starts at 690 ISK and goes up by 300 ISK per kilometre.

Car in Iceland

If you’re living out of the city or plan on exploring all of Iceland’s incredible sights, then it’s a good idea to have your own car. A litre of gas for your car costs 220 ISK on average, or around €1.60. Cars with 4×4 drive are best equipped to navigate Iceland’s wide, rocky terrain. Domestic flights within Iceland are also well organised if you prefer to explore the country this way.

Groceries

We’ve already mentioned that, due to most products being imported, the price of groceries can be expensive in Iceland. This also means that fresh produce may not be as fresh or high-quality as you are used to in your home country. Data from Expatistan gives the following figures for Iceland grocery store prices, which we have approximately translated into Euros:

  • 1 litre of whole fat milk – €1.17
  • 12 large eggs – €6
  • 1 kg (2 lb.) of tomatoes – €3.57
  • 500 gr (16 oz.) of local cheese – €9.20
  • 1 kg (2 lb.) of apples – €3.32
  • 1 kg (2 lb.) of potatoes – €2.80

Food that can be grown or made locally will be cheaper than that which needs to be imported, but it may not be to everyone’s tastes in some cases. Fermented shark is one of the country’s delicacies, for example.

Miscellaneous

When it comes to eating out in Reykjavik, prices are also pretty expensive compared to other European countries, so most people go out for food and drinks as an occasional treat rather than a regular occurrence.

Shopping for clothes, electronics, and other things is also expensive due to the price of importation, so a lot of Iceland’s residents prefer to shop online or travel over to nearby cities like Copenhagen for cheaper prices. If you’re moving to Iceland, it’s best to pack as many clothes as you can rather than planning on buying a whole new wardrobe while you’re out there.

When it comes to sport and leisure in Iceland, you can get a monthly membership for a gym or fitness club for €50 or more on average. A cinema ticket will cost around €11 and a theatre performance is much more expensive at around €40.

Iceland living standards

Although the cost of living is high, it is made up for by an equally high standard of living. Along with other Scandinavian countries, Iceland ranks as one of the happiest countries in the world when citizens are surveyed. It recently ranked as the fourth happiest country in the world behind fellow Scandinavian countries, Finland, Denmark, and Norway.

Person in Iceland

According to the OECD’s findings, Iceland ranks incredibly high for a number of factors, including subjective life satisfaction, health, community, safety, and the environment, as Iceland has very low pollution levels.  

Average Salary in Iceland

Fortunately, national salaries also fairly reflect the high cost of living. In 2017, the average annual income in Iceland was 6.4 million ISK, or approximately €51,000, before tax. This was a 6.7% increase from the previous year. Iceland recovered incredibly well after the crash in 2008, and average income levels now lie close to what they were before the crash, when they peaked in the year 2000.

Some of the highest paying jobs in Iceland include physicians, dentists, C-level executives, pharmacists, architects, and data scientists. Even a relatively low-paying job like a supermarket cashier receives, on average, more than €21,000 salary. Reykjavik is also an up and coming hub for startups. It ranked 37th in our list of the 85 best cities for startup businesses.

Startup

When looking for a job in Iceland, it is best to look in Reykjavik or perhaps one of the smaller cities like Kópavogur and Hafnarfjörður. Living in the countryside, employment opportunities will be scarce unless you are looking for farm work. If you’re moving to Iceland with no understanding of the language, then you can still find plenty of work in the tourism sector, particularly, but learning Icelandic will open up many more avenues for you.

Cost of living in Iceland for international students

Iceland proudly boasts a 99% literacy rate, so it is clearly a country with high standards when it comes to education. The University of Iceland in Reykjavik is the main institution for both local and international students. The city is also home to the smaller Reykjavik University and Iceland Academy of the Arts.

Students can benefit from more affordable accommodation compared to the rest of Iceland, with the average room in a student house costing between €600-€800 per month. You’ll also save big since public universities in Iceland have no tuition fees, which includes the University of Iceland. All you have to pay is a registration fee of somewhere between €115 and €290. Universities outside of the capital, such as Bifröst University, will have slightly lower living costs since the cost of living in Reykjavik is higher.

If you’re applying to study at the University of Iceland, then bear in mind that applications close in February each year and you’ll find out if you’ve been admitted around March or April. From this point, you can start preparing for your move, looking for accommodation, and preparing all the necessary documents to relocate.

Whatever reason you’re moving to Iceland for – work, study, culture – you’re sure to have a great time and see and experience some amazing things when living and working in Iceland.

 

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