Grafarvogur is a suburban district in the northeast of Reykjavík, built mostly from the 1980s onward. It was designed for families: detached houses with gardens, wide streets, playgrounds, and good schools. The neighborhood has a quiet, residential character.
It sits along the coast of Grafarvogur bay, and several walking paths run along the waterfront. The area is less dense than older parts of Reykjavík and feels distinctly suburban. The proportion of immigrants here is among the lowest in the city (around 4% in some sections, per the 2021 census).
Rent is moderate by capital area standards. Expect 230,000–310,000 ISK for a one-bedroom or small two-bedroom apartment (as of early 2026). Houses for rent occasionally appear but are rare.
The main downside is distance. Grafarvogur is about a 15–20 minute drive from downtown, and bus service, while available, is less frequent than in more central areas. A car is close to essential here.
Suits: Families with children, people who prefer suburban quiet and have a car.
Árbær
Postal codes: 110 (partial) Municipality: Reykjavík
Árbær sits in eastern Reykjavík, between Breiðholt and Grafarvogur. It developed primarily in the 1960s and 1970s but has a greener, more spread-out feel than Breiðholt. The Elliðaárdalur valley runs through the area, a surprisingly lush green corridor with walking trails, a salmon river, and a waterfall.
The Árbær Open Air Museum, which reconstructs historic Icelandic buildings in a village setting, is a local landmark. The district has its own swimming pool (Árbæjarlaug), schools, and a commercial area.
Rent is similar to Breiðholt or slightly higher. A one-bedroom apartment typically costs 210,000–290,000 ISK (as of early 2026). The area attracts a mix of families and working professionals.
Bus connections to downtown run along the main corridors, with a ride time of roughly 20–25 minutes. Like Grafarvogur, a car makes daily life easier.
Suits: Families, people who value green space and a slightly quieter residential pace, anyone looking for affordability within Reykjavík city limits.
Kópavogur
Postal codes: 200, 201, 203 Municipality: Kópavogur (population ~35,000)
Kópavogur is Iceland's second-largest municipality, directly south of Reykjavík. The boundary between the two is invisible at street level. To a newcomer, much of Kópavogur feels like a continuation of Reykjavík's southern suburbs.
The town has its own commercial center around the Smáratorg area, anchored by the Smáratorg Tower (Iceland's tallest building) and a large shopping mall. Two swimming pools, multiple schools, and the Gerðarsafn art museum round out the local amenities. Kópavogur is self-sufficient for daily needs.
Rent varies across the municipality. Eastern Kópavogur (203) has some of the highest average rents per square meter in the capital area outside central Reykjavík, partly because apartments there tend to be newer and larger. Western Kópavogur is generally more affordable. Across the town, expect 230,000–320,000 ISK for a one-bedroom (as of early 2026).
Strætó bus routes connect Kópavogur to downtown Reykjavík in about 15–20 minutes, depending on the route. Bus 1, one of the most frequent routes in the system, runs directly between Kópavogur and the city center.
Suits: Families, working professionals who want suburban convenience with good transit connections, anyone looking for a self-contained town that is still effectively part of the capital.
Garðabær
Postal codes: 210, 225 (Álftanes) Municipality: Garðabær (population 20,116 as of January 2025)
Garðabær sits between Kópavogur and Hafnarfjörður along the coast. It is one of the more affluent municipalities in the capital area. The housing stock is newer on average than in Reykjavík, with a mix of single-family homes and apartment buildings.
The municipality includes the Álftanes peninsula (postal code 225), which is home to Bessastaðir, the official residence of the president of Iceland. The area is quiet, residential, and scenic.
Garðabær is also where you will find the only IKEA and Costco stores in Iceland. For practical daily life, this matters more than it might sound.
Rent in Garðabær tends to sit at the higher end of the capital area range. Expect 260,000–350,000 ISK for a one-bedroom (as of early 2026), with larger family homes commanding significantly more. The proportion of immigrants is among the lowest of any capital area municipality.
Bus service connects to both Reykjavík and Hafnarfjörður, though frequency is lower than in Kópavogur. Having a car is the norm here.
Suits: Families with higher budgets, people who want newer housing and a quieter suburban setting, anyone who values proximity to big-box retail (IKEA, Costco).
Hafnarfjörður
Postal codes: 220, 221 Municipality: Hafnarfjörður (population ~31,500)
Hafnarfjörður is Iceland's third-largest municipality, located about 10 km south of Reykjavík. It has a distinct identity as a port town with a long history. The town center, concentrated around the old harbor, has a small-town feel with independent shops, cafes, and a few good restaurants.
The town is known for its connection to huldufólk (hidden people) folklore and hosts an annual Viking festival in June. These are tourist draws, but they also reflect a genuine local culture that sets Hafnarfjörður apart from the more generic suburbs.
For residents, the key advantage is relative affordability. Rent in Hafnarfjörður is generally lower than in Reykjavík or Garðabær. A one-bedroom apartment typically runs 210,000–290,000 ISK (as of early 2026).
Hafnarfjörður has its own schools, swimming pool, shopping, and medical services. It functions as a self-contained town. The Strætó bus 1 route connects it to downtown Reykjavík in about 25–30 minutes. An aluminum smelter operates on the outskirts, which is worth knowing if you are considering housing on the southern edge of town.
Suits: People who want a town with its own character and community, budget-conscious families, anyone who does not need to be in central Reykjavík daily.
Mosfellsbær
Postal codes: 270, 271 Municipality: Mosfellsbær (population nearly 14,000)
Mosfellsbær lies about 12 km northeast of Reykjavík, on the way toward the interior. It is the most nature-adjacent municipality in the capital area. Mt. Esja, one of Iceland's most popular hiking mountains, rises directly behind the town.
The town has a literary connection: Nobel Prize-winning author Halldór Laxness lived and worked at Gljúfrasteinn, his home just outside town, which is now a museum.
Mosfellsbær feels semi-rural in parts, with horse farms and open land mixing with newer residential developments. The town center is small but functional, with a school, a swimming pool, and basic shops.
Rent is generally lower than in Reykjavík proper, reflecting the distance from the center. Expect 200,000–270,000 ISK for a one-bedroom (as of early 2026). The drive to downtown Reykjavík takes about 15 minutes by car. Bus service exists but runs less frequently than in the core capital area.
Suits: Nature lovers, horse enthusiasts, remote workers who value quiet surroundings, anyone who wants a small-town feel within commuting distance of the capital.
Seltjarnarnes
Postal code: 170 Municipality: Seltjarnarnes (population ~4,700)
Seltjarnarnes is a small peninsula municipality at the westernmost tip of the capital area, bordered by the ocean on three sides. It is the smallest municipality in Iceland by land area (about 2.1 km²) and the most densely populated.
The area is almost entirely residential. There is no commercial center to speak of, no nightlife, and very few services beyond schools and a medical center. The Grótta lighthouse, accessible on foot at low tide, is a local landmark and a popular spot for sunset walks and northern lights viewing.
Despite its size, Seltjarnarnes has a loyal following among residents. It is exceptionally quiet, the ocean views are constant, and it sits only about 5–7 minutes by car from downtown Reykjavík. Walking and cycling paths along the coast are excellent.
Rent availability is very limited because the housing stock is small and turnover is low. When apartments do come up, expect 250,000–330,000 ISK for a one-bedroom (as of early 2026). Bus service connects to downtown, though frequency is modest.
Suits: People who prioritize quiet, coastal living, and do not mind limited local amenities. Best for those with a car.
Which area suits you?
Rather than ranking neighborhoods, here is a practical framework.
If your budget is tight: Look first at Breiðholt, Árbær, Hafnarfjörður, and Mosfellsbær. These offer the lowest rents in the capital area while still providing access to jobs and services.
If you have children: Grafarvogur, Garðabær, and Kópavogur are popular family choices with strong schools and safe, quiet streets. Vesturbær and Laugardalur also work well for families who want to stay closer to the city center.
If you do not have a car: Stick to 101, Vesturbær, Hlíðar, or Laugardalur. These areas are walkable and have the best bus connections. Kópavogur also works if you live near a Bus 1 route.
If you work remotely: The whole capital area is viable. Consider Mosfellsbær or Seltjarnarnes for quiet and nature, or Hafnarfjörður for character and lower costs.
If you want community as a newcomer: Breiðholt has the largest established immigrant community. Downtown Reykjavík (101) and Vesturbær have the most internationally oriented social scenes.
For a full breakdown of monthly costs across the capital area, see our cost of living guide. If you are still planning your first weeks, our first 30 days checklist walks through the practical steps of getting set up. If you are considering buying rather than renting, our guide to buying property in Iceland covers the process, costs, and mortgage options.
Frequently asked questions
Is the capital area safe? Yes. Iceland consistently ranks as one of the safest countries in the world, and that applies across the entire capital area. There are no neighborhoods that a newcomer should avoid for safety reasons. Crime rates are low everywhere.
Can I live in the capital area without a car? In the most central parts of Reykjavík (101, 107, 105, 104), yes. Strætó buses cover the capital area, but service frequency drops the further out you go. If you live in Grafarvogur, Mosfellsbær, or Garðabær, a car makes daily life significantly easier. See our public transport guide for routes and schedules.
Which neighborhoods have the lowest rent? Breiðholt, Árbær, and Hafnarfjörður consistently offer the most affordable rents in the capital area. Mosfellsbær is also relatively affordable. Central areas (101, Vesturbær) are the most expensive.
Where do most immigrants live? Immigrants are spread across the capital area, but Breiðholt has the highest concentration of foreign-born residents. Kópavogur and Hafnarfjörður also have sizeable immigrant populations. Garðabær, Grafarvogur, and Seltjarnarnes have the lowest proportions.
Are there international schools in the capital area? A small number of international schools in Reykjavík offer English-medium instruction, primarily serving the diplomatic and expat community. Tuition is significant. Most children of immigrants attend Icelandic-language public schools, where support programs help with the language transition.
How different are the municipalities from each other? Each municipality sets its own local policies on things like daycare fees, services, and property taxes. In practice, the differences are modest. Daycare (leikskóli) waitlists and fees can vary between municipalities, which is worth checking if you have young children. See our daycare guide for details.
Last updated: March 2026
