THE AVERAGE NATIONAL rent rose by 2.2 per cent last year – marking the first rise in annual rents since 2007 – according to the latest Daft.ie Rental Report.
The increase in rents is being driven by the country’s largest cities, according to the figures. Rental rates in Dublin, Cork and Galway saw a second consecutive year of growth – with an annual rise of 6.4 per cent, 1.8 per cent and 2.3 per cent, respectively.
Rents in other areas of the country continued to fall, however, with annual drops of 1.1 per cent in Limerick city and 2.8 per cent in Waterford. Average rents outside of the cities fell by 1.1 per cent – although, notably, this was the smallest annual decline observed since the start of 2008.
The average rent nationwide in the final quarter of 2012 was €808 – compared to an average of €790 in late 2011. The number of properties available to rent nationwide has also fallen its lowest since mid-2008.
Property bubble glut
“While much of the country is still dealing with a glut of properties from the bubble, it is increasingly evident that there is a shortage of rental properties on the market in urban areas, and in particular Dublin,” Ronan Lyons, Economist with Daft.ie, said. “This may be alleviated temporarily by stock currently held in Nama coming on to the market, but ultimately Ireland’s major cities will need to prevent future inflation in rents by planning for new construction.”
Lyons said the latest figures clearly showed that the period of sharply falling rents was “confined to 2008 and 2009 alone”.
He added that the Irish the property market is as much about location as it is about supply and demand: “Or, put another way,” he said. “Ireland is home to more than one property market and that is why we are seeing rising rents again – it is rising in some places but not in others.”
Noting that Dublin rents had seen an increase of about 6 per cent, while landlord in Ulster and Connacht were “fighting for the attention of prospective tenants”, Lyons said that the aftermath of the property bubble had revealed a universal truth.
Shortage in biggest cities
“One remarkable feature of Ireland’s bubble was the ability for people to get jobs pretty much anywhere – you could live in a small town and not worry about work. Since the crash, though, it is apparent that Ireland can no longer defy what is the modern economic equivalent of the law of gravity: the pull of cities.”
The evidence from the rental market showing that Dublin is facing – if anything – a shortage of accommodation, he continued: “Roughly half of what are termed ghost estates units in Dublin are units on paper only – they are just at planning stage.”
Lyons warned that, without new supply in Ireland’s cities, rental inflation may be here for a while – and may pose adverse consequences for Ireland’s competitiveness.
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