In 2018, 4.5% of the population or almost 16,000 persons lived in homes in arrears of mortgage or rent in the past 12 months. This percentage has declined year by year since 2013, although the decline between 2017 and 2018 is within the margin of error. The percentage of households on the rental market that are in arrears has never been lower. At the beginning of the time series, in 2004, 12.2% of tenants were in arrears, but in 2018 they were 5.3%. As a rule, the percentage is lower among households in their own housing or 3.1% in 2018. This is among newly published results from the survey on income and living conditions (EU_SILC) for Iceland.

arrears1 Note. Percentage of individuals living in homes in arrears on mortgage or rent payments and 95% confidence interval.

Arrears more common for men with basic education
Most people living in households in arrears in 2018 were in the lowest income quintile, or about 20%. The proportion of individuals living in households in arrears decreases with rising income. Arrears are more common in younger age groups than older ones, which can for example be seen by the fact that there are proportionally fewer who live in households in arrears among 55 year olds and older than among younger people.

There is a link between education levels and arrears. Arrears are less common among college educated and have been declining. In 2017, the ratio was 4.4% but 2.6% in 2018. In comparison, 5.9% of individuals with basic education lived in households in arrears in 2018 or 3.3 percentage points higher. On average, there is a bigger difference between males than females as regards the ratio of arrears by education. The highest rate of arrears is among men with basic education, 8.4% in 2018.

Housing cost burden heaviest among people with low income and tenants
Half of the Icelandic population spent up to 17.7% of their household’s disposable income on housing in 2018. The proportion of of people living in households with a housing cost overburden was 8.9%, or about 31,000 individuals in about 17,000 homes. Housing costs are considered to be overburdening when the total cost of housing is more than 40% of the household’s disposable income. This burden is not evenly distributed, as one in four in the lowest income quintile experienced overburdening housing cost, while the proportion was much lower in the other income quintiles.

Overburdening housing costs are more common among tenants than among people living in their own housing and the gap between the groups has been widening since the beginning of the time series in 2004. In 2018, 19.6% of households on the rental market had overburdening housing costs compared with 7.9% of privately owned homes. In apartment buildings with 10 or more apartments, the proportion of homes with overburdening housing costs was higher, or about 14.6%, compared with the proportion in detached housing where it was 9.2% in 2018.

arrears3 Note. Percentage of housing where the total housing cost was more than 40% of the total disposable household income and 95% confidence interval.

Assessment of housing cost burden has decreased more than calculated burden
People’s assessment of their housing cost burden has decreased more year by year than calculations of the housing cost burden. In other words, the subjective assessment of the burden of housing cost has changed more from year to year than the calculations of the housing cost burden, the latter being an aggregate of different housing expenses. For example, in 2011, 33.9% of the population considered their housing costs to be a heavy burden, which is the highest estimate of assessed housing cost burden for the time series. However, in that same year the proportion of people who lived in homes with a calculated overburdened housing cost was 11.8%. In 2018, 14.3% of individuals assessed their housing cost burden as heavy while 8.9% of people lived in households with a housing cost overburden.

arrears3 Notes. Calculation of burden refers to the percentage of individuals who live in households where the total housing costs are more than 40% of the total disposable household income. Assessment of burden refers to the percentage of individuals who assess their housing costs to be a heavy burden. The figure also shows the 95% confidence interval.

About the data
The data comes from EU-SILC for Iceland. Concurrently with the publication of results for 2017 and 2018, previous results have been revised and corrected. The correction meant that electricity and heating costs were taken into account in earlier calculations of the housing cost burden. The impact of the correction is primarily felt by tenants. Figures from 2018 are preliminary figures.

Housing cost overburden rate is based on calculations of the housing cost burden. The housing cost burden is calculated as the percentage of disposable household income that is spent on housing. The housing cost overburden rate is the percentage of the population living in households where total housing costs ('net' of housing allowances) represent more than 40 % of disposable income ('net' of housing allowances).

Total disposable household income per consumption unit considers the total disposable income as well as the composition of the household. This calculation takes into account efficiency gains of the household with more than one individual living under the same roof. Further, expenses for children are considered to be lower than expenses for adults.

In 2010 a new question that measures assessment of housing cost burden was added to the survey in accordance with Eurostat regulations. In the new question all factors of the housing cost were read out to the respondents but the older question is more general with no reading out of the different factors. This is the reason why the time series only dates back to 2010 for this question.

The EU-SILC is a longitudinal study involving contact with more than 5,000 households yearly.