New rental housing has opened in Hvammstangi, a small fishing and service town on the Vatnsnes peninsula in northwest Iceland. The development adds much-needed long-term accommodation to a region where housing shortages have made it difficult to attract and retain workers in local industries.
Key takeaways
- New rental units have opened in Hvammstangi, addressing a chronic housing shortage in northwest Iceland.
- The development is aimed primarily at long-term residents and workers, not tourists.
- Hvammstangi sits on the Vatnsnes peninsula, roughly 170 km north of Reykjavík via Route 1 and Route 711.
- Rural housing shortages are a growing policy concern across Iceland’s smaller municipalities.
Hvammstangi is the kind of place that people outside Iceland rarely hear about, but it punches above its weight. It’s the main service hub for Vatnsnes — a peninsula best known for its large harbour seal colony at Illugastaðir — and it hosts a seal centre, a small harbour, and enough infrastructure to make year-round life here genuinely workable. The problem, for years, has been finding a place to live if you want to stay.
Rural municipalities across Iceland have struggled to house the workers their local economies actually need. Healthcare staff, teachers, tradespeople, and service workers have all been turned away — not by a lack of jobs, but by a lack of flats. This is not a Reykjavík problem. In the capital you can find an overpriced apartment on any given Tuesday. Out in the regions, supply is simply thin, and new construction moves slowly because the economics of building in small communities rarely pencil out without some form of public support.
Why rental housing in Hvammstangi matters for northwest Iceland
The opening of new rental units here is a concrete step toward stabilising a community that depends on a steady local workforce. According to Iceland Review, the new housing is intended to support long-term residents rather than short-term visitors. That distinction matters. Tourism accommodation is already scattered across the region — guesthouses, cottages, farm stays. What Hvammstangi and similar towns have been missing is ordinary housing for ordinary people who want to put down roots.
Skagafjörður and Húnaþing vestra, the municipal district where Hvammstangi sits, have both flagged housing as a development priority. When a nurse or a mechanic can actually rent a flat in town, the whole community becomes more resilient. Schools stay open. The health clinic stays staffed. The petrol station on the main road stays open past six in the evening.
I drove through Hvammstangi last autumn on the way back from the Westfjords, stopped for coffee at the N1 on the main road, and had a genuinely good conversation with the woman behind the counter about how hard it was to keep staff in the area. She’d been there for years, she said, but the younger workers kept leaving because there was nowhere to live. That’s the kind of gap this housing is designed to close.
Northwest Iceland remains one of the country’s more overlooked travel corridors despite the quality of its landscapes. The Vatnsnes loop, the turf church at Víðimýrarkirkja just east of Varmahlíð, and the highland roads toward Ásgarður all reward the detour. But none of that matters to the people who live and work there if the basic infrastructure of daily life — housing — isn’t in place.
Frequently asked questions
Where is Hvammstangi and how do I get there from Reykjavík?
Hvammstangi is on the Vatnsnes peninsula in northwest Iceland, about 170 kilometres from Reykjavík. The most direct route follows the Ring Road (Route 1) north and then turns onto Route 711 to reach the peninsula. The drive takes roughly two to two and a half hours depending on conditions.
Is the new housing in Hvammstangi available for tourists or short-term visitors?
No — the new rental units are intended for long-term residents and workers, not short-term visitors or tourists. If you need accommodation in the area as a traveller, guesthouses and farm stays on the Vatnsnes peninsula are the better option to search for.
Why is there a housing shortage in rural Iceland?
Rural Icelandic towns often struggle to attract developers because small population sizes make new construction financially risky without public support. The result is a persistent gap between the number of jobs available and the housing needed to fill them, which has pushed workers toward Reykjavík and other larger centres.
