With the advent of decked ships in the latter half of the 19th century, the fish­ ing industry grew in Reykjavík. At around this time, the town was becoming established as the centre of government, commerce and services. The pop­ulation of the town mushroomed in a matter of years, and there was a short­ age of housing.

The area north of Skólavörðuholt was developed at about this time, including the Skuggi district and Grettisgata. Most of the houses were originally small and low-roofed, built by the working-class. Many of them have since been extended. Building land was in short supply. so when houses had been built along the streets, more were commonly added behind them, in the back-gardens of the existing buildings. Workshops were often housed in these “back-houses” or in basements.

In 1902, Reykjavík’s first true apartment-building, Bjarnaborg, (now Hverfisgata 83) was built. At one time, 168 people lived in this single building. Reykjavík’s first town plan, made in 1927 (see section K), proposes two- and three-story concrete build­ings along all streets in the district. Several houses were built as planned, but the total plan was never put into practice. Hence concrete houses are scattered here and there among the older timber houses.