Living in Iceland: cost of living, pros and cons

Iceland is a small island country in the North Atlantic, known for its stunning natural beauty, including glaciers, volcanos, and waterfalls. The population of Iceland as of 2023 is over 376,000, with immigrants making up around 16% of the population. The majority of people in Iceland live in the capital, Reykjavik, and the surrounding areas.

Living in Iceland can be both challenging and rewarding. The cost of living is relatively high, especially when it comes to housing, food, and transportation. However, Iceland also has a high standard of living, with excellent healthcare and education systems, a low crime rate, and a strong social safety net. If you are in love with Iceland after visiting this country, considering living in Iceland or moving to Iceland, this blog might give you some insight into what it is like living in Iceland.

What is it like living in Iceland?

Iceland is considered to be a great place to live in. Iceland has been ranked among the top countries in the world in terms of quality of life, safety, and happiness. The country boasts a high standard of living, excellent healthcare and education systems, a clean and healthy environment, and a strong economy.

Iceland also has a thriving cultural scene and offers plenty of opportunities for outdoor activities, such as hiking, skiing, and swimming in natural hot springs. Iceland has a low crime rate and is known for its welcoming and friendly population. But as you might already know, the cost of living in Iceland is high, it is also one of the main reasons stopping people from moving to Iceland.

Cost of Living in Iceland: high

There are several reasons why the cost of living in Iceland is high. Iceland is a small island country with a small population, making imported goods and services relatively expensive. The country’s remote location and harsh climate also contribute to higher prices, as transporting goods to and from the island can be difficult and costly.

Iceland also has a high standard of living and a well-developed welfare system, which requires a higher tax burden on residents and businesses. This means that prices for goods and services in Iceland are generally higher than in other countries. Finally, Iceland’s tourism industry has boomed in recent years, which has driven up prices for accommodation, dining, and activities as demand has increased. We summarised some cost of living in Iceland for your reference:

Average monthly salary in Iceland

The average monthly salary of a working person in Iceland is about 690,000 Icelandic krona (approx 4890 USD/4610 EUR) per month, which ranges from 174,000 ISK (lowest average, approx 1230 USD/ 1162 EUR) to 3,070,000 ISK (highest average, approx 21,750 USD/20.510 EUR). The actual monthly salary an individual earns heavily depends on their education level and industry. The minimum monthly salary Tax is 31.45% if you earn less than 409,986 per Month; 37.95% and 46.25% of income tax are applied to those earning more per month.

Housing rental average price in Iceland

Rental prices in Reykjavik, the capital city, are particularly high, with the average cost of a one-bedroom apartment around 150,000 ISK (approx 1062 USD/ 1000 EUR) per month.

Average food expenses in Iceland

Food is also quite expensive in Iceland, especially if you prefer to eat out:

• Cheap fast-food meal per person: ≈ 2000 ISK (15 USD/ 13 EUR)
• Cheapest small Domino Pizza ≈ 2500 ISK (18 USD/ 17 EUR)
• Dinner at a regular restaurant per person≈ 5000 ISK (35 USD/ 33 EUR)
• Dinner at a finer restaurant per person≈ 7-8000 ISK (50-57 USD/ 47-53 EUR)

If you are willing to cook at home and shop at local grocery stores, you can save money; here is a food price average from grocery stores in Iceland:

• 1L Milk ≈ 200 ISK (1.5 USD/ 1.3 EUR)
• 1L fruits (apple/organe/banana) ≈ 300 -500 ISK (2.1-3.6 USD/ 2- 3.3 EUR)
• 12 eggs≈ 700 ISK( 4.9 USD/ 5 EUR)
• 1 kg vege ≈ 5-900 ISK( 3.5-6.4 USD/ 3.5- 6 EUR)
• 1 kg potato ≈ 2-600 ISK(1.4-4.2 USD/ 1.3- 4 EUR)
• 1 kg Icelandic lamb ≈ 3000 ISK( 21.3 USD/ 20 EUR)
• 1 kg beef ≈ 4000 ISK( 28.5 USD/ 26 EUR)
• 1 kg pork ≈ 2000 ISK( 14.2 USD/ 13 EUR)
• 1 kg chicken ≈ 1000 ISK( 7.1 USD/ 7 EUR)

Average Transportation cost in Iceland

Transportation in Iceland can also be pricey, especially if you need to purchase a car. However, public transportation is available in Reykjavik and some other cities, and the monthly bus ticket for an adult is approx 4.500 ISK.

Iceland car rental options exist for those who want to explore the countryside, and the rental price depends heavily on the seasons and the length of the rental. Gasoline is also more expensive in Iceland than in many other countries; it is currently at 322 ISK (2 USD/ 2.2 EUR) per litre. You can check the live Gasoline price in Iceland on this website.

Other expenses in Iceland can include healthcare, insurance, and utilities. Healthcare is cheap for Icelandic citizens and residents; health Insurance is also required for anyone living in Iceland, and utility costs can vary depending on the size of your home and the time of year.

Job Opportunities in Iceland

Iceland has a small but growing job market with various opportunities, but it would be relatively hard for foreigners outside of the EU, EEA, EFTA or the Faroe Islands to be able to work in Iceland, as it requires specific skills and professionalism to acquire a working permit in Iceland.

Some of the major industries in Iceland

Tourism significantly contributes to Iceland’s economy, with many job opportunities in hospitality, transportation, and tour operations. Fisheries have long been a mainstay of Iceland’s economy, with opportunities in fishing, fish processing, and related industries. Iceland is also rich in geothermal and hydropower energy, with job opportunities in energy production and related fields.

Iceland has been building a strong technology sector in recent years, with job opportunities in software development, gaming, and IT services. Additionally, there are opportunities in healthcare, education, and public service.

While Icelandic is the primary language, some companies operate in English and seek international talent. However, proficiency in Icelandic may be required for certain positions, particularly those in the public sector.

Work Visas and permits in Iceland

If you are of foreign origin, you must apply for a resident permit and work visa before working and living in Iceland. For more detail, you can refer to Iceland immigration office website and directorate of labour and get more information.

Living in Iceland Pros and Cons

Living in Iceland has its own set of pros and cons that potential residents should consider before making a move:

Pros of living in Iceland

• Safety: Iceland is considered one of the safest countries in the world, with low crime rates.
• Natural beauty: Iceland is renowned for its stunning natural landscapes, including glaciers, geysers, and waterfalls.
• High standard of living: Iceland has a high standard of living with good healthcare and education systems.
• Unique culture: Iceland has a rich cultural heritage with a unique language, music, and literature.
• Outdoor activities: Iceland offers a wide range of outdoor activities, such as hiking, skiing, and fishing

Cons of living in Iceland

• High cost of living: Iceland is one of the most expensive countries to live in, with high costs for food, housing, and transportation.
• Limited job market: The job market in Iceland is relatively small, and it may be difficult for foreigners to find work.
• Harsh weather: Iceland experiences cold and dark winters, with limited daylight hours, and unpredictable weather patterns.
• Isolation: Iceland is located far from other countries and can feel isolated, especially during the long winter months.
• Language barrier: Icelandic is the official language of Iceland, and while many Icelanders speak English, it can still be challenging for foreigners to navigate daily life without knowing the language.

Living in Iceland: Pros and Cons

Living in Iceland can be a unique and rewarding experience. Iceland is known for its natural beauty, outdoor activities, and vibrant culture. The country offers a high quality of life with excellent healthcare, education, and social services. The population is small and close-knit, easily connecting with people and building strong relationships.

However, the cost of living in Iceland is relatively high, especially for imported goods, making it challenging to manage finances. The weather can also be unpredictable and harsh, especially during winter. Despite these challenges, Iceland’s unique culture, friendly people, and stunning landscapes make it a desirable place to live for many people.