The 8 best hostels in Reykjavik for a budget break in Iceland's cool capital

The city’s hostel scene is in many ways more vibrant and better value for money than the mid-range options. Hostels such as Kex, Oddson and Hlemmur Square, for example, have worked hard to merge a relaxed, indie aesthetic with hotel-standard design, while the regular backpacker joints focus more on classic services like tours, communal kitchens and free coffee. It's not hard to find a superb location either, with many hostels within a few minutes to museums featuring medieval sagas and thrilling Viking history, edgy art galleries and excellent cafés, bars and restaurants – and the tiny downtown area can be walked in less than a day. With attractive Scandi design and hip yet homely atmospheres, here's our pick of the best hostels in Reykjavik.

This chic yet relaxed hotel-hostel offers a great location and an impressive spread of amenities that span a café-bar, a lounge that hosts concerts by local bands, and a gym. Kex – the Icelandic word for biscuits – is a reference to the hostel’s former incarnation as a biscuit factory. As well as spacious, comfortable dorms for between eight and 16 people (mixed as well as women-only, availability permitting), the hostel has private rooms for singles, couples and families. Most of the singles and doubles have views across the bay outside, though only two ‘hotel-quality’ double rooms come with en-suite bathrooms.

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The Loft is one of Reykjavik’s leading hostels, offering a range of dorms, twins and private rooms, a buzzy vibe at the weekends and a great location right in the middle of the city’s bar, restaurant and café district. The warm and sociable atmosphere is thanks in part to an upbeat interior created by local young designers. The public areas – which include a lounge-bar and communal kitchen area, plus a rooftop terrace – are colourful, spacious and mostly filled with natural light during the day, and furnishings are modern and fairly stylish throughout, albeit minimal in the rooms.

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Upscale hostel meets boutique hotel in an up-and-coming downtown location on the quieter eastern end of the main street, Laugavegur. Comfortable, stylish rooms and spacious dorms are chic and contemporary, with colourful walls, wooden floors and giant beds. Most rooms have private balconies, a real treat with those ocean and mountain views. Mingle with locals over craft beers and cocktails at happy hour, and dine on traditional Icelandic fare. You might find exhibitions, music performances and many creative events at Hlemmur Square, or for something closer to home, the hotel sometimes hosts live music.

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This friendly hostel punches well above its budget accommodation weight. It offers good quality private rooms as well as dorms, and also has a spacious breakfast room, communal kitchen and capable staff who can book tours and other hostels around the country. The overall aesthetic is simple, clean and minimal, with a special emphasis on being environmentally friendly, for which it has received accreditations. As well as Wi-Fi in rooms and public areas, the hostel offers free computer access and social activities like book exchanges, and social events are also hosted in the lobby area.

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Sandwiched into a long, two-storey office and commercial block, the hostel – as suggested by the name and concept – has a decidedly futuristic feel that largely emulates the classic ‘sci-fi’ aesthetic of Tokyo-style pod hotels. The lobby area is spacious and open-plan, decked out with modern sofas and trendy lamps, and with great views across the mountains. Each of the 38 pods, decorated in minimal black-and-grey chic, has a comfortable mattress with memory foam mattress-topper as well as a curtain or door for privacy, plus a reading light, mirror and shelf, and fans.

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This bright backpacker hostel occupies a building originally constructed as a garage for large buses, which explains the high ceilings and oversized doors at the end of the common area (where the buses were once driven in). The interior décor – especially in the lounge – has an impressively homely and elegant atmosphere with lots of retro furnishings, rugs and quirky old paintings on the walls. As well as a spacious and quirky common room, it offers simple but comfortable private rooms and dorms, as well as two guest kitchens and a small on-site bar.

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This hostel has an excellent location, right in the heart of Laugardalur Park, close to the national sport stadiums and Iceland’s biggest swimming pool and thermal spa (Laugardalslaug). It offers four- to six-bed dorm rooms with private and shared bathrooms, as well as some comfortable double and twin rooms with private bathrooms. The four-bed dorms have lockers; you can bring your own padlock or buy one in the reception for a small fee. Rooms are pleasant, with modern furnishings and dashes of bold colour to liven things up. Though quite basic, they all have linen included while the private rooms have a bit more space and towels are provided.

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A family-owned hostel, which enjoys a convenient city centre location, a few minutes' walk from the bars, cafés, clubs and galleries of Laugavegur. It comprises five houses that were once residential (hence the ‘village’ reference). The main building is where the action (and most of the charm) lies, with the other buildings a little isolated and underwhelming in terms of facilities and design. One of the most pleasant aspects is that all the houses have gardens large enough for relaxing and playing (two of them have designated play areas for kids) as well as patios with barbecues.