Government Faces Housing Crisis After Volcanic Eruption

Grindavik, Iceland, was evacuated last week as lava rushed into buildings.

The former prime minister of Iceland has suggested constructing a new town entirely to accommodate the evacuees. The city is still at risk of volcanic explosions, and experts predict it will soon be uninhabitable. Considering Iceland’s population of only 400,000, the 3,700 people who lived there before the eruption constitute a substantial number.

Government officials are rushing to find places to accommodate displaced people and limit their financial losses as this problem takes center stage in the national conversation.

Some of the town’s residents are staying with relatives, while others are renting short-term apartments, summer cottages, or rooms in hotels. Population growth and tourism, which has resumed after the pandemic, have already led to a saturated housing market in Iceland. According to Iceland’s tourist board, there were over 8,000 guestrooms available for short-term rental in the capital region as of last summer. Homebuyers should be aware that interest rates are currently over 9%.

Finnar Jonasson, the mayor of Grindavik, lamented that the lack of housing options had dispersed the town’s inhabitants across the nation, making it difficult for them to secure stable housing.

Former Grindavik residents are getting some of their rent paid for by the government, but there’s a bill being proposed that would give the government the power to acquire all the homes in the region and then sell them back to the original owners when it’s safe to do so.

According to volcanologists, the southwestern Reykjanes Peninsula, which includes Grindavik, is expected to have volcanic activity for the next 10 to 20 years. Recent earthquakes have fractured the town, and a construction worker fell into a hole that is thought to be forty meters deep. That person is considered to be deceased.

The primary pipeline that brought hot water to the households of Grindavik was also broken during the eruption.