My husband, 11 year-old daughter and I will be in Iceland for 4 days at the beginning of July. Does anyone know of a cheap place to stay in Reykjavik?
We stayed at the city youth hostel and it was one of the cleanest and quietest we have ever been to. There is also a really big thermal city pool about 3 blocks away that is popular with locals and not very known to tourists. Very warm! When we were there the temp outside was about 57 but the pool felt great and you get that nice Scandinavian hot/cold thing going.
Don't be scared away by the notion of a youth hostel. Consider it part of the experience. Ask for a room for 4 to get a private room, but you will have to pay for all 4 beds - still reasonably priced, though. They also handle the many tours available. Often the tour bus stops right at the door.
Google Reykjavik city hostel
We are staying at Guesthouse Sunna next month. We've read a lot of reviews on it, and looked at the website. Seems to be a nice place. Might want to look into it. I can't guarantee, but it's worth looking into.
We were going to stay at Luna Guesthouse, but our local friends wouldn’t allow it and insisted we stay with them instead at their row house. This place isn't super cheap, but the fact that the apartments are equipped with full kitchens or kitchenettes can save you money if you can eat in while visiting a relatively expensive city (even after the collapse of their economy). Luna has studio to two-bedroom apartments in a residential part of Reykjavik…check it out online: http://www.luna.is/english/
Check tripadvisor for other options and perhaps a cheap sleep.
July is going to be as "high season" as high season gets in Iceland, so "cheap" will be a relative term. We were there in April and stayed in the Hotel Reykjavik Centrum for about $140/nt. While there, I looked up their rates online for a random weekend in July and the rate was MUCH higher.
However, tourism has been down due to the volcano, and even though the volcanic activity has settled down, it will take a while for tourism to bounce back to pre-eruption levels. So I suggest monitoring the website (the usuals - travelocity, expedia, hotels.com, etc etc, as well as a generic search for "Iceland hotels" or "Reykjavic hotels" and see what you find. I doubt you will end up paying rack rates.
By the way, the Centrum is absolutely fabulous!
The hostel recommended by others is well located, actually quite close to the Centrum, in the west end.