Where to stay in Reykjavík

Reykjavik is a small and walkable city, but choosing the right neighbourhood can make your stay much more enjoyable. Whether you are visiting for a short city break or using Reykjavik as a base to explore Iceland, each area offers a slightly different atmosphere.

Most travellers spend 2–7 nights in Reykjavik.

Downtown Reykjavík

Downtown Reykjavik – 5 Minute Walk

The downtown area around Laugavegur and Austurstræti is the busiest part of the city. Visitors who stay here are close to restaurants, bars and nightlife.

Pros:

lively atmosphere
many restaurants and shops
central location
Main shopping street
Rainbow street

Cons:

can be noisy at night
accommodation often expensive

Vesturbær – Quiet but Close to Everything

Just west of Reykjavík’s city centre lies Vesturbær, one of the capital’s most beloved neighbourhoods and a place where visitors can experience a quieter, more local side of the city. Known for its colourful houses, seaside views and relaxed pace, Vesturbær offers a welcoming atmosphere that feels distinctly Icelandic while still being only a short walk from downtown Reykjavík.

Unlike the busy streets around Laugavegur, Vesturbær has a more residential character. Tree-lined streets and small clusters of houses create a calm environment that many travellers appreciate after a day of sightseeing. Despite its peaceful feel, the neighbourhood remains very connected to the city centre, with Reykjavík’s Old Harbour, museums and main shopping streets all within easy walking distance.

Visitors staying in Vesturbær can easily walk to:

Reykjavik Old Harbour (300 meters)
House of Parliament (350 meters)
the city centre (400 meters)
museums and galleries (400 meters)
City Hall (450 meters)
Harpa conference center (900 meters)
Kolaportið flea market (500 meters)
Rainbow street (1000 meters)
Hallgrímskirkja (1500 meters)
Sunvoyager (1500 meters)

Vesturbær is also home to Vesturbæjarlaug, one of Reykjavík’s most popular geothermal swimming pools. Outdoor pools are an important part of Icelandic daily life, and visiting one is a uniquely local experience. Vesturbæjarlaug has a friendly neighbourhood feel and is often filled with residents relaxing in the hot tubs, making it a great place for visitors to experience Iceland’s famous swimming pool culture.

Old Harbor Area

Reykjavík’s Old Harbour is one of the most atmospheric and lively parts of the city. Once the working heart of Iceland’s fishing industry, the area has gradually transformed into a vibrant waterfront district filled with cafés, restaurants, galleries and creative studios while still retaining its maritime character. Fishing boats, whale-watching vessels and small tour boats continue to move in and out of the harbour, giving the area a sense of life and authenticity that many visitors find irresistible.

Today the Old Harbour is one of the best places in Reykjavík to wander without a plan. The former warehouses that once stored fishing equipment have been renovated into art studios, design workshops and small galleries, giving the neighbourhood a creative and slightly bohemian feel. Visitors can often step inside working studios to see Icelandic artists and craftspeople creating ceramics, prints, jewellery or textiles inspired by the island’s landscapes.

The harbour is also one of the best places in the city to discover local Icelandic craft and design. Small independent shops sell handmade wool goods, contemporary Icelandic design pieces, ceramics, and locally produced souvenirs that feel far more authentic than mass-produced tourist items. Many of these shops are run by local makers, making it easy to find something unique while also supporting Reykjavík’s creative community.

Food is another major attraction of the Old Harbour area. Within just a few streets you can find a wide range of restaurants and casual eateries, from traditional Icelandic seafood to modern Nordic cuisine and international flavours. The neighbourhood is especially well known for its seafood restaurants, where fresh fish and shellfish are often served just a short distance from where they were caught. At the same time, visitors will also find bakeries, coffee roasters and small cafés that make the harbour a pleasant place to spend a relaxed afternoon.

As evening approaches, the area becomes even more lively. The Old Harbour has developed a reputation for its welcoming bars and relaxed nightlife, with several cosy pubs and waterfront bars offering a great place to enjoy a drink after a day of exploring the city. Compared with the busy downtown streets, the atmosphere here tends to feel slightly more laid-back while still providing plenty of energy and social buzz.

The harbour is also a starting point for many of Reykjavík’s most popular tours. Whale watching boats, puffin tours and northern lights cruises depart from the docks, adding to the constant sense of activity around the waterfront. Even if you are not taking a tour, watching the boats come and go while enjoying a coffee or a meal is part of the experience.

For visitors staying nearby, the Old Harbour area offers one of the most interesting and walkable parts of Reykjavík, combining maritime history, creative culture, local shopping and a lively food scene in a compact and welcoming waterfront neighbourhood.

Budget Accommodation in Reykjavik

While Reykjavik has many hotels and hostels, smaller guesthouses can offer a more relaxed and affordable alternative.

Refurinn Guesthouse in Vesturbær is a good option for travellers looking for budget accommodation in Reykjavik within walking distance of the harbour and city centre.

Why stay at Refurinn Guesthouse in Reykjavik?

Travellers looking for budget accommodation in Reykjavik often prefer small guesthouses with a relaxed atmosphere. Refurinn Guesthouse in Vesturbær offers affordable rooms within walking distance of Reykjavik’s harbour and city centre, making it a convenient base for exploring the city.

Refurinn Guesthouse is a small nine-room guesthouse in Reykjavik’s Vesturbær neighbourhood offering affordable accommodation within walking distance of the city centre and old harbour.