New approach to real estate purchases could lower prices in Iceland

A novel approach to real estate transactions, known as "Fjöldakaup" or Mass Purchase, has been presented in Iceland, aiming to tackle the current housing market conditions. Introduced at the autumn meeting of the Housing, Building and Planning Agency, this strategy focuses on consolidating the purchasing power of individuals seeking to buy homes.

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And this has materialized; we have sold apartments through this and managed to lower the price.

The core principle of Fjöldakaup is to gather individuals interested in buying apartments to collectively strengthen their negotiating position. By acting as a unified group, buyers can demand bulk discounts from sellers, a benefit typically unavailable to individual purchasers. This method, well-established in other countries, also offers advantages to sellers by allowing them to offload multiple units at once, saving them the costs and time associated with selling properties piecemeal over extended periods.

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It is entirely in the hands of the developers to name the price.

Halldór Kristján Sigurðsson, founder of Fjöldakaup, confirmed the method's effectiveness, stating, "And this has materialized; we have sold apartments through this and managed to lower the price." Currently, approximately 400 individuals are registered with Fjöldakaup. Sigurðsson noted that the group has achieved around a 7% bulk discount on apartments sold so far, a figure he expects to increase.

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I have seen, for example, rental companies receive up to a 10% discount on apartments in new buildings.

Sigurðsson also challenged the notion that lending institutions dictate high real estate prices in Iceland. He asserted that pricing is entirely in the hands of developers. He pointed out that rental companies often receive discounts of up to 10% on new apartments, suggesting that similar savings could be passed on to individual buyers through collective action. With a significant inventory of unsold new and existing apartments, Sigurðsson believes buyers are in a stronger negotiating position, creating further sales pressure on developers.

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There is no news that people are bidding below the asking price today, and below the asking price that was set for properties last year.