Iceland’s capital has seen a rapid growth in its tourist economy in the past 20 years. Set against a backdrop of dramatic mountains and glaciers and the North Atlantic Ocean, the small city offers access to volcanic landscapes, geothermal hot springs, and the northern lights.

There are 2,772 entire homes listed across Airbnb in Reykjavik and the surrounding area, with 413 private bedrooms and 6 serviced apartments. The neighbourhood with the most listings is , with 566 entire homes costing an average of €265 per night. The second most populated neighbourhood for whole rental properties is with 409 listings, followed by with 327 entire homes.

In early May 2024, a law was introduced to restrict the use of residential housing for business-oriented rentals. This legislation, led by the Minister of Culture and Business Affairs, still allows owners to rent their homes for up to 90 days annually, capped at a rental income of 2 million ISK (approximately $14,300), but extended use as tourist accommodation is now limited to official commercial or rural properties.