The True Cost of Living in Iceland
Updated: Jan 24
Iceland now has an established global reputation. It’s known for its glaciers, active volcanoes, woolly jumpers, and Viking heritage. It’s also believed by most to be an expensive place to visit. When moving to Iceland frequently gets asked the question by tourists, “Isn’t it really expensive to live here?” Well, that depends.
Let’s take a look at the cost of living in Iceland. Even if some aspects of Iceland living are slightly costly, it’s still the best place for a road trip.
Before getting into the average cost of living in Iceland, let’s examine how it got to where it is today. The island nation is very much a developed country with one of the best living standards in the world. It frequently ranks near the top in terms of happiness on global indexes. But has it always been this way?
It might surprise you to know that Iceland was very much a predominantly farming nation until after World War II. The demand for Iceland’s goods, particularly in the form of sheep meat and fish, exploded during the war. That and the influx of British and American troops during the occupation helped to propel Iceland into modernization.
The increase in trade in the last hundred years has allowed Iceland to become a very wealthy country. With one of the highest life expectancies and lowest crime rate, the country is a secure place to live. However, as is generally the case, a higher living standard also entails a higher cost of living. So, how does that look on a day-to-day basis?
Iceland’s Cost of Living: US Dollar and Icelandic Króna Comparison
Here are some comparisons to the cost of basic expenditures between the USA and Iceland to give you an idea. This information is sourced from numbeo.com via hundreds of individual contributors.
Before getting into specifics, here is an overall summary. Numbeo.com estimates that the cost of living in Iceland is 31.97% higher than in the US. Iceland’s rental costs, on the other hand, are 19.10% lower than in the US. And so, economically speaking, there are pros and cons to living in both places. Here are some examples of comparative numbers.
Food/Drink Average Cost
A meal in an inexpensive restaurant in Iceland costs on average ISK 2.500, or $19.08. In the US, the average cost is ISK 1.965, or $15.00.
Alcohol is also important to calculate the cost of living in Iceland. One pint of draft local beer costs on average ISK 1.160/$8.85 in Iceland. In the US, the average cost is ISK 655, or $5.00.
A regular-sized cappuccino amounts to ISK 595/$4.54 in Iceland, and ISK 580/$4.43 in the US.
One pound’s worth of bananas costs ISK 143/$1.09 in Iceland, and ISK 94/$0.72 in the US.
Transport and Leisure
One mile in a taxi costs approximately ISK 533/$4.07 in Iceland, and ISK 341/$2.60 in the US.
One gallon of gasoline is priced at around ISK 950/$7.25 in Iceland, and ISK 482/$3.68 in the US.
Membership at a fitness club for one month is ISK 8.635/$65.92 in Iceland, and ISK 4.829/$36.86 in the US.
Accommodation and Salaries in Iceland
The cost to rent a one-bedroom apartment in a city center of Iceland is ISK 181.333/$1384. In the US, a one-bedroom apartment would set you back ISK 202.153/$1543 per month.
To buy an apartment in an Iceland city center, the cost per square foot averages at ISK 59.075/$450. In a US city center, this cost is ISK 55,088/$420.
After tax, the average monthly salary amounts to ISK 436.112/$3,329 in Iceland. In the US, the salary is around ISK 473.027/$3,610.
Daily Life in Iceland
The numbers give us an indication of life in Iceland, but don’t necessarily reflect a large part of the population. While Iceland is one of the richest countries in the world by GDP per capita, not everyone benefits from this. And although the island, in general, has one of the highest living standards in the EU, not everyone lives comfortably. You need to know that:
Iceland is heavily reliant on tourism and the fishing industry. These are key sectors if you are trying to find a job in Iceland. Do bear in mind that seasonal fluctuations are pervasive in the tourism industry.
The global financial crisis in 2008 arguably hit Iceland harder than most other countries, affecting the average person mostly. Although many businesses, unfortunately, had to close and unemployment rose, the country was able to persevere. And so, while it can be said that most Icelanders live comfortable lives economically, this is by no means secure.
If you’re thinking of moving to Iceland, it’s certainly possible and offers the chance of a great life. But unless you’re from Norway or another country where the cost of living is even higher, prepare for budget changes.
The Cost of Living in Rural Iceland
In simplistic terms, the country can be split into two parts: the Capital Region and the rest of Iceland. The Capital Region consists of Reykjavík and six municipalities, and it contains almost two-thirds of the country’s population. While housing prices vary depending on the area, the Capital Region is undoubtedly more expensive than the rest of Iceland.
Once you leave Iceland’s Capital Region, there are very few large urban areas around the country. Most of the towns have only a few thousand people or less. Rent and accommodation are more expensive in Iceland’s capital region. Food and other daily essentials do not differ much in price around the country.
Since Iceland has no trains and few long-distance buses, cars are essential for travel. As we saw above, petrol is much more expensive here than in the US.
Since most visitors to Iceland stay close to the Capital Region, the far corners of Iceland receive less tourism. They are still very much reliant on fishing and farming.
The average cost of living in Iceland
While it can be said that Iceland has a high cost of living, the salary generally reflects this. The country’s prices are usually higher than New York City. Now, with three powerful unions protecting the rights of workers, it’s not easy to exploit people in genuine employment for money. Iceland does not have a tipping culture, so don’t feel obligated to tip, but don’t try to negotiate price either. The price is the price here.
Visit Iceland and see the living standard for yourself. Book your rental now to explore the land of fire and ice for yourself, at Campervan Reykjavik. As you travel around, you’ll hopefully come to the conclusion that most people seem content, even happy, to live here. It is the land of fire and ice, after all; there aren’t many places you can see volcanoes and glaciers!