1,480 km from Ireland and located at a latitude of 64degrees08' N Reykjavik, Iceland's largest city, is the most Northern capital city in the world and within easy reach of the Arctic Circle.

What's so special about it?

The city's real selling point is its almost unearthly scenery. Iceland is richer in hot springs than any other country in the world and the landscape is characterised by steam vents and mud pools, which can be used for heating and power generation.

The power output of the Torfa glacier area, which is the largest, is equivalent to 1,500 megawatts and the water in the 800 hot springs have an average temperature of 75degrees Celsius. The largest, Deildartunguhver, has a flow of 150 litres of boiling water per second and geysers also are known to spout hot water up to heights of over 180 feet.

11% of Iceland is also covered in icy glaciers and the largest covers an area of 8,400 km, which is larger than all the glaciers on the European mainland put together. Iceland is particularly famous for its Blue Lagoon geothermal spa, which is near Reykjavik and said to have healing qualities!

Best kept secrets:

Although the city only has a small population it has become popular with Europeans with about 1,000 British expats already living here, possibly attracted to the commonly repeated "statistic" that there are seven women for every man in Iceland. History also tells us that the first inhabitants on the island were crusading Irish monks, who arrived there in the eighth century.

Who lives here?

Iceland's name was put on the map by the eccentric singer Bjork. However famous visitors have included Sir Winston Churchill, Ronald Reagan, Mikhail Gorbachev and Marlene Dietriech. According to website lastminute. com, Reykjavik is the second most popular destination for celebrities after Paris. Pulp star Jarvis Cocker enjoys the city's clubs and actor Christian Bale and Top Gear star Jeremy Clarkson are fans. Blur frontman Damon Albarn liked it so much he bought a house in the outskirts of the city and invested in a trendy city centre cafe bar.

What's the property market like?

62% of Icelandic residents live in Reykjavik and according to local TV station NFS residential house prices in the area grew by 33% in 2005 and have more than tripled in the past 15 years. OECD figures show that due to the lowering of real interest rates and increased supply of loans in 2004 prices rose by 41% between 2004 and 2006. The Icelandic Central Bank reports that foreign investment jumped from 82m in 1990 to an estimated 2.5bn in 2003 as foreign companies flock to set up in the country.

How do you go about buying property?

When deciding to buy in Iceland getting a copy of Fasteignabla_i_ (a weekly real estate newspaper) is essential. Failing that the next option is contacting The Union of Property Sellers in Iceland for a guide to the best of the 93 agents available.

Agents in Iceland work for both buyers as well as sellers so investors should be diligent that they have their best interests at heart.

Foreign citizens must also apply for a special permit at The Minister of Justice to buy real estate and buyers also need to have a payment evaluation done by a local bank.

The good news is that the Icelandic government's housing loan department can offer mortgages at reasonable rates.

Where are the best places to buy?

Those in the know report that the most affluent postcode is the 101 area . . . Reykjavik's answer to D4. With such a small population Reykjavik is a very spread out city and the residential areas are mainly low-density suburbs where houses are widely spaced with many green areas.

What's the rental market like?

There is very little unemployment in Iceland and there is high demand for property, therefore for investors there are willing buyers and renters and the potential for high capital returns. The tourist industry is also healthy, with 360,000 visitors making the trek each year and numbers growing by about 11% per year.

What type of property is available?

The majority of properties are apartments, which make up nearly 50% of buildings, and the majority have three bedrooms. While it has a mesmerising landscape Iceland is not known for its architecture and Reykjavik grew rapidly in the 20th century so most of the buildings in the Reykjavik Metro Area were built after 1970. Many houses in Reykjavik also have brightly coloured, corrugated iron siding on them, which is to protect them from the rain. The city's best known building, Hallgrim's Church, was built in a modernist, spare, Nordic style while The Pearl building has a huge dome sitting on top of six gigantic hot-water tanks.

How much does property here cost?

Houses in the city's main shopping street start from 196,000 and increase to 305,000 for larger family homes. For a luxury one-bed apartment in a new development prices start at around 290,000, however some agents have nice modern apartments on offer for less than 100,000. Latest figures from the Land Registry Database report that the average selling price of a house in Reykjavik at present is 292,080.

USEFUL CONTACTS Guide to Buying in Iceland: www. ahus. is Icelandic Tourist Board: 00354-535-5500 or www. visiticeland. com Iceland Review Cultural information site: 00354 512 7536 or www. icelandreview. com The Land Registry of Iceland: 00354 515 5300 or www. fmr. is The Union of Property Sellers in Iceland: 00354 588 1640 or www. fasteignir. is / www. ff. is Icelandic Embassy: 0044 20 7259 3999 or www. iceland. org/uk Property Search Site: www. habil. is FAST FACTS Getting there: Icelandair "ies from Dublin, Cork and Shannon, the low frills airlines Iceland Express "ies from London and the Icelandic charter airline Excel Airways recently launched a base in Ireland.

Area: 274.5 km_ Population: 114,800 Currency: Kronur ( 1 = 87.14 ISK) Weather: From 14degreesC in Summer to -2degreesC in Winter Transport: Being a spread out city a car is essential.

A public bus system exists but is not widely used.

Going out: Dubbed "the nightlife capital of the north" Icelanders tend to go clubbing late so night life only comes alive around midnight as many locals drink at home. This is because alcohol is expensive and beer was banned up until 1989. There are over 100 bars in the city, mostly in the Laugavegur area and closing time at weekends can be as late as 7am.

Eating Out: Food is not traditionally their forte and delicacies can include six-month rotted shark meat, pickled ram's testicles or roast puf"n! Eating out is expensive but "sh dishes are popular and the city has a diverse range of ethnic restaurants and 'Baejarins bestu' or hot dog stands.

Shopping: Shoppers will be delighted to know there is a 15% tax reduction for travellers spending over 4,000 ISK.