This town is also known as The Town in the Lava Field or The Town of the Elves. It received its municipal rights in 1908 and developed around one of the most important trading post for centuries. The rich fishing grounds are nearby and the deep sea angling boats are specially equipped for the purpose.

The catch belongs to the anglers, who can have it prepared in one of the restaurants in town upon request or in some instances on the boats. The distance from the capital to Hafnarfjordur is 12 km.