Fear that people will not buy new flats because they will have higher interest rates. If the people do not invest more, the prices of these assets will stagnate or fall. Whoever buys in times of a loose monetary policy, wins. When screws begin to tighten, the winner is the one who sells first.
In the Czech Republic, we have gone through four decades of central planning of prices of practically everything. And the result? Either the price has been set too high and surpluses have been accumulated, or too low, and the television in the evening informed the audience about shortages of underwear and toilet paper.
Iceland does not have much chance to go wrong. The current system is sufficiently large a disaster to require trying something else. They experienced capital controls, hyperinflation and there are financial crisis on average every 15 years. The currency suffers from chronic degradation. It would be nice to take a chance on an experiment in a country where the changes of a poorly performing financial system cannot be impeded by too powerful bankers and politicians.