A House on 17 Pristine Acres in Iceland
$1 MILLION (125 MILLION ICELANDIC KRONUR)
This three-story farmhouse is outside Reykholt, a small village in the Haukadalur geothermal valley of southwest Iceland, about 70 miles east of Reykjavik.
Built in 1958 to house two families, the property is perched on 17 upland acres with majestic views of nearby mountains, glaciers, geysers and the winding Tungufljot River, said Asdis Osk Valsdottir, a broker with Husaskjol Real Estate, which has the listing. In 2015, the main house was renovated into a 10-bedroom inn with accommodations for 24 guests.
Most of an adjacent 2,479-square-foot stables building, circa 1960, has been converted to a restaurant with a bar, bathrooms, laundry room, storage and shower facilities. It still houses stables for as many as 18 horses.
Called Kjarnholt III after a horse farm that once operated on the land, the 3,257-square-foot concrete house is painted white and has a metal roof. A short stairway ascends to a second-floor entrance that opens to a foyer with more stairs to the right. A central hallway bisects the large kitchen and a bathroom to the right, and two living rooms with large picture windows on the left. Two bedrooms are at the end of the hall.
The kitchen is licensed as a commercial kitchen with a Franke sink, Siemens oven and solid Icelandic stone countertops. Floors are oak. Much of the home’s furniture, which is rustic and includes some antiques, is included in the asking price, Ms. Valsdottir said.
A concrete staircase with an ornate metal railing climbs to a third floor with five bedrooms and a bathroom. There is a balcony off the central hall and attic storage above. Floors are oak, and the bathroom has Italian tile. The home’s lower level has three bedrooms with floors of polished and lacquered concrete, a bathroom, and storage and utility rooms. A sauna and shower room with three stalls opens to an outdoor hot tub flanked by stone pavers.
The sprawling property is “organized as a business and service plot,” according to the listing, with approved plans for up to 14 small cottages to be built on the land. The remaining portion of the stables could also be converted to residential space, Ms. Valsdottir said.
Kjarnholt III is located in the geothermal area of Haukadalur Valley, near several important sites on Iceland’s Golden Circle tourism route, including Gulfoss Falls, Thingvellir National Park (a Unesco World Heritage) and Geysir, a large, mostly inactive hot spring that is the origin of the English word “geyser.” Strokkur, another nearby geyser, erupts every five to 10 minutes and can be seen from the home’s kitchen window, Ms. Valsdottir said.
Skáholt, a religious site dating back a millennium, is about 15 miles southwest. Other attractions in the area include thermal baths, hiking trails, golf courses, river rafting, swimming pools and numerous lakes with recreational activities. The small village of Reykholt, about 10 miles away, has a grocery store and an internationally renowned restaurant, Fridheimar. The closest international airport is in the city of Keflavik, about 90 miles west. Reykjavik, Iceland’s capital and largest city with about 130,000 residents, has only a domestic airport, located 70 miles west of the property.
An island nation close to the Arctic Circle with about 339,000 residents, Iceland has seen home prices surge in recent years, due in part to a strong economy and a housing shortage. But the market has been cooling since 2017, brokers said.
“I wouldn’t say it’s booming,” said Jason Kristinn Olafsson, a broker with Miklaborg Real Estate. “We had a big increase in prices from 2011 to 2017, but it has stabilized since then.”
According to a January 2019 report from Reykjavik-based Arion Bank, housing prices in areas near the capital city increased by 18.9 percent year-over-year in 2017, but only by 6.2 percent in 2018, a trend that is anticipated to continue with slower population growth and increasing housing supply.
The driving force behind the growth in supply in 2018 was home construction in municipalities located within a 45-minute drive of the capital, according to the Arion Bank report.
Low interest rates on home loans are helping to offset Reykjavik’s steep housing prices and draw more buyers into the market, Ms. Valsdottir said. “There are also way more first-time buyers,” she said. “In 2009, the first-time buyers were 7.5 percent of all buyers. Now they are 27.7 percent.”
Home prices in Iceland’s Southern Region are typically about 70 percent of those in Reykjavik for comparable properties, Mr. Olafsson said.
Ms. Valsdottir said that a house in Selfoss, a town of about 7,000 residents located about 36 miles east of the capital, might sell for 40 million to 50 million kronur ($320,000 to $400,000), the same as a three-bedroom apartment in Reykjavik.
“A lot of young families, and even senior citizens, tend to move outside of the capital area for better housing that fits their needs better,” she said.
Who Buys in Iceland
Most second or vacation homes in the Southern Region have an asking price of 20 million to 30 million kronur ($160,000 to $240,000), Ms. Valsdottir said. However, foreign home buyers are typically looking for properties in Reykjavik, though there are some in search of land outside the capital.
Foreign buyers tend to come from the European Union and the United States, brokers said.
Mr. Olaffson said he’s been seeing increasing numbers of Americans interested in purchasing a home in Iceland.
Apart from European nationals, foreign home buyers in Iceland must apply for permission from the government to purchase property, which is typically granted, Ms. Valsdottir said.
Aside from some nominal fees, stamp duty makes up the bulk of closing costs for home buyers, with first-time buyers paying 0.4 percent of the home’s real estate appraisal value and other buyers paying 0.8 percent, Ms. Valsdottir said.
The cost of stamp duty for a typical home is about 250,000 to 375,000 kronur ($2,000 to $3,000), Mr. Olafsson said, noting that buyers needn’t hire a lawyer since real estate brokers are required by law to represent the interests of both the buyer and seller.
Home loans from Icelandic banks are available to home buyers living and working in Iceland, brokers said. Banks will typically loan 80 to 85 percent of the purchase price, Mr. Olafsson said.
Languages and Currency
Icelandic; krona (1 krona = $0.008)
Taxes and Fees
The annual taxes on this property are currently 587,454 kronur, ($4,700), Ms. Valsdottir said.
Asdis Osk Valsdottir, Husaskjol Real Estate, 011-354-519-2600