How Much Does It Cost to Live in Iceland?

Iceland is an attractive destination for many. With a great quality of life, a safe and clean environment, and strong sense of community, the Nordic country has a lot to offer expats.

But Iceland, like many other Nordic countries, is known for being an expensive place to live. But how much exactly does it cost to live in Iceland? Numbeo puts the cost of living in Iceland at £3,770 per month for a family of four, excluding rent, and £1,020 per month for an individual. Below, we look into the different things that will affect how much it costs to live in Iceland for an expat.

In centuries past, Iceland was heavily reliant on its trading of seafood, fish, lamb, mutton and wool to bring in revenue. The economy of Iceland is still small and subject to high volatility. However, in recent years tourism has provided stability to the country’s economy – in 2019, the tourism sector accounted for a third of Iceland’s GDP. Tourism has now overtaken the fishing sector as the most important part of Iceland’s economy.

Their renewable energy sector is also rapidly expanding and becoming a global player in the high-tech market. Iceland is the world’s largest electricity provider per capita, thanks to its abundance of geothermal and hydroelectric energy sources. This, in turn, helps to bolster Iceland’s manufacturing sector.

The official currency of Iceland is the Icelandic Krona or ISK. The Icelandic Krona is available in the following denominations:

Notes: 500, 1000, 2000, 5000, 10,000

Coins: 1, 5, 10, 50, 100

Although Iceland is in Europe, it is not a member of the European Union and so does not use the euro. While cash is accepted across the country, the majority of transactions are made via credit or debit card, or via bank transfers.

As of October 2023, 1 ISK is equal to 0.0059 GDP, or 0.0072 US dollar, meaning £1 = 168 Krona, and $1 = 138 Krona.

Iceland has a high standard of living and expats will not be disappointed by the properties on offer, even if they are slightly more expensive than they are used to.

Because the majority of Icelanders tend to buy properties rather than rent, expats will find that the pool of properties to let is significantly smaller than other countries. Most employers relocating staff to Iceland will have a home set up for them due to this.

According to Numbeo, it will cost, on average, £1,354 per month to rent an apartment in the centre of a city in Iceland. This reduces to £1,138 for an apartment outside of the city centre. For a larger, three-bedroom home, prices can range from around £1,690 to £1,950, depending if you’re in a rural or urban area.

Iceland is championed for its high-quality medical care, and it operates a universal healthcare system which is primarily funded through taxes. All Icelanders are given access to this healthcare, as well as any expats or travellers who work in the country for over six months. Until this six-month threshold is reached, many expats opt for international health insurance to ensure they are protected.

The public healthcare system does not cover every factor of healthcare. For example, individuals may need to contribute to paying for prescription medication as well as pay the full price for drugs such as antibiotics. In addition, in some areas, wait times for treatment can be long. As such, private international medical insurance can be beneficial for expats who want quicker and more flexible access to their healthcare.

Just like healthcare in Iceland, schooling is of an exceptional standard and is free. Expats should remember that the majority of Iceland’s state schools are based on a Nordic system and curriculum, and lessons are taught in Icelandic.

For this reason, some expat parents choose for their children to attend one of the international schools located in the likes of Reykjavik and Gardabaer. Costs for international schools in Iceland will be around £20,000 per year.

Expats from EEA countries will not require a work permit or a visa to work in Iceland. Most employers who are relocating members of staff to Iceland that aren’t from an EEA country will apply for this permit on your behalf.

Whilst many Icelandic people speak English, Icelandic will be the language primarily used in business settings. Therefore, it will be beneficial to understand and speak some basic Icelandic before you move, to help you integrate.

Around 80% of jobs in Iceland are required to be filled by expat workers due to shortages of Icelandic workers. So, it can be easy to find a job in the country, particularly if you have experience working in an area where Iceland has a skill shortage. Some of the sectors most popular with expats seeking work include healthcare, IT, construction and tourism.

The average monthly salary in Iceland is 573,000 ISK or around £3,390. There is no official, legal minimum wage in Iceland, but in general people will receive a minimum of 230,000 ISK per month, or £1,360. This is typically given to younger people with less experience.

Salaries will vary depending on the role and where you’re based. Salaries in the capital of Reykjavik will generally be higher than in smaller towns and cities. An architect, for example, can expect a salary of around £80,000 per year, a lecturer could get around £50,000 per year and a waiter could earn £20,000 per year.

The world’s largest database, Numbeo, has a vast selection of user-contributed data in regard to Iceland. It estimates that the cost of living in Iceland is, on average, 42% higher than in the UK. The UK is cheaper across the board for various cost of living factors. The one area where Iceland is cheaper is for utility bills, which are generally cheaper thanks to the abundance of renewable energy in the country.

The tables below provide an overview of the differences in costs between Iceland and the UK. Please note that all Icelandic prices have been converted into British pounds.

If you’re moving abroad to Iceland, keep yourself covered with flexible international health insurance from Expatriate Group. Get a quote online or contact us for more information.