The True Cost Of Living In Iceland

You’ve probably heard a rumor that Iceland is really expensive. And compared to some countries, it’s true.  Someone coming from Argentina would probably be in for a shock at the supermarket, with a loaf of bread costing three times more in Iceland than back home.  But is Iceland really so expensive for most of the world? Let’s take a look at how much things cost in the land of fire and ice. We’ve put everything into the equivalent USD to make things easier for our international readers. But don’t forget the Icelandic currency is króna!  

Accommodation

Renting In Iceland 

The average rent for a one-bedroom flat in Reykjavik is equivalent to 1,700 dollars a month. (But it’ll cost more in the city center).  So that’s a pretty similar rate for most European capital cities, such as London or Paris. But it’s considerably more expensive than somewhere like Budapest, where you could rent an apartment for a few hundred dollars a month.  If you choose a single room or studio apartment, you can probably get away with 1000 to 1500 dollars a month on rent. 

Buying In Iceland

Buying in the capital is expensive; you’re looking at around 5000 dollars per square meter. That’s a lot compared to some countries, but let’s not forget that it costs more than 30,000 dollars per square meter in Hong Kong! Reykjavik comes in at number 138 of almost 500 countries listed by Numbeo. In rural Iceland, you can get a surprisingly good deal. In 2021, a 135-hectare property with a farmhouse and hostel went up for sale.  It came with a further 400 hectares of communal grazing land and cost around 970,000 dollars.  Ok, it’s not cheap exactly. But a similar size farm in the nearby UK would cost around four times that much, and that’s without any buildings. 

Hotels and Hostels

For short-term visitors, there is a huge variety of accommodation available in Iceland. A hostel starts at around $50 a night, which is probably quite a bit more expensive than you’re used to in other countries. Camping is a viable option, with pitches starting at $10 a night.  For a 5***** hotel, you could be looking at around $700 a night. (But of course, you’ll find something much more pricey if you’re determined for the best). 

Food

Groceries 

Iceland has to import a lot of food, so you might notice that the groceries and restaurants are more expensive than in other countries you’ve visited.  Here is the average cost of some basic food items in Iceland:

Loaf Of Bread	$3.10
Liter Of Milk	$1.20
Box Of 12 Eggs	$6.15
Bottle Of Wine	$20
Frozen Pizza	$5
Sack of potatoes (1 kilo)	$2.60
Liter of juice	$2.30
Breakfast Cereal (700g)	$5
Apples (Kilo)	$3.40
Blueberries (125g)	$4.70

So, groceries may be a bit more expensive in Iceland than you’re used to. And of course, the quality of food that you buy will significantly impact the price. But there’s nothing too terrifying in that list. (Apart from alcohol, which is expensive in Iceland)

Restaurants

You’re more likely to get a shock when you eat in a restaurant or cafe. Honestly, a simple hot dog can cost around 20 dollars in a gas station. (Yes, you read that right!) You can get a decent one-course meal in Reykjavik for about $20 in the cheaper places. But most people will be spending around $30 - $40 for a traditional meal in the capital. (And that doesn’t include dessert or drinks!) So if you’re staying in Iceland for more than a few days, it’s a good idea to do some cooking in your accommodation, rather than eat all your meals out. Of course, if your budget does stretch to Icelandic restaurants every day, go ahead and enjoy!

Alcohol 

Alcohol is expensive in Iceland. So, if you drink, it’s a good idea to pick some wine or beer up at the duty-free when you come into the country.  A pint of ‘cheap’ beer in Iceland is going to cost you around $8, and a bottle of vodka will easily cost you $50 in the liquor store. (You can’t buy alcohol in the supermarket).   There are limits on how much alcohol you can grab at the duty-free. (For example, 1L of spirits and 0.75L of wine and 3L of beer would be one combination you could go for). Luckily, most bars and restaurants in Iceland have a happy hour, where drinks are more affordable. So don’t hesitate to check these out!

Fuel

The price of fuel is going to change constantly along with the global economy. But In September 2021, the average cost of gasoline in Iceland was $1.978 per liter. (That’s 7.488 for a gallon).  At the moment, Costco is the cheapest place to fill up in Iceland, but ÓB, Orkan, Dælan, and Atlantsolía are also reasonable. N1 and Olís are more expensive, so try to fill up regularly when you have the chance somewhere else!

Vehicles 

If you’re visiting Iceland, it makes more sense to rent a car than to buy one. This is because car insurance is expensive here, and you’d be lucky to spend less than 80 dollars a month on even longer-term insurance.  You can technically rent a vehicle for as little as $20 a day. But that won’t include insurance, fuel, sign-up fees, or unlimited mileage.  A more realistic price range would be from $40 to $120 a day, depending on the type of vehicle that you choose.  If you did want to buy a second-hand car, you’d be looking at around $8000 as a minimum, and you may struggle to sell it again when it’s time for you to leave.   

Medical Care

Medical Care in Iceland is not cheap, so it’s always best to get insured before visiting. It costs around $50 - $80 for a 15-minute doctor’s appointment without any treatment.  If you need to go to the hospital, the check-in fee can start from $500 if you’re paying privately.  The National Health Insurance automatically covers residents, but visitors may have to pay big bills if they haven’t sorted out insurance. 

Going Out In Iceland

A ticket to the movies costs just shy of $10 in Iceland.  But if you’re going out clubbing, prepare to spend quite a bit more. One cocktail can cost more than $20 outside of Happy Hour, and a glass of basic wine will cost around $12.  It costs about $10-$20 to get into a nightclub, so most people just have a couple of drinks that they sip slowly throughout the night. The locals are more likely to drink at home until late in the evening, so clubs and bars don’t get busy before midnight. 

Salaries In Iceland 

The average salary in Iceland is around $66,000 a year, or $32 per hour.  There is no government fixed minimum wage, but various organizations negotiate minimum wages for each sector.  So there is a minimum wage for servers (around $760 a month) and another for teachers (around $1915). 

Overall Cost Of Living In Iceland

According to the University of Akureyri, housing costs like accommodation and utilities start at 100,000 IKR per month, and daily costs, including food start at 50,000 IKR per month.  So if you were to live like a hermit in Iceland, your minimum monthly needs would be 150,000 IKR, or $1,172.51. For people planning on having some kind of social life apart from chatting to the cashier at the grocery store, you’d need to set aside more money in your budget. 

Final Thoughts 

No matter where you are in the world, the cost of living is in constant flux. And that’s not to mention how much individual lifestyles play into your budget.  For someone happy to spend their free time hiking and who doesn’t own a vehicle, you could probably get away with a monthly salary of $1300 (166,426.00 IKR). You’d have to be constantly watching your wallet, though, and you can forget about having a social life.  If you want to eat out or go to parties, then you’d need more than that. But considering the average monthly salary in Iceland is $5,537.85/month, you’ll be more than covered if you get a local job.