THE AVERAGE RENT in Ireland has increased by 85% compared to the EU average of 18% between 2010 and the second quarter of 2022, a new study has shown.

The latest Housing Market Monitor published by the Banking & Payments Federation Ireland (BPFI) has shown that the demand for housing as well as the significant gap between average rent and mortgage payments have led to prices rising consistently.  

The report also said that “population growth and considerable pent-up demand” have also added to the crisis. 

Brian Hayes, Chief Executive of the BPFI, said that higher housing and general living costs as well as the future uncertainty in the wider economy are likely to affect mortgage demand.

“As our latest monitor shows today, looking to the medium and longer term, the significant gap which now exists between average rents and mortgage payments coupled with significant latent demand are likely to balance any negative impact on demand for mortgage lending in the short term which will likely continue to impact house prices unless we see a substantial increase in supply,” he said.

Hayes said that, for example, the average first time buyer monthly mortgage payment was just over €1,000 during the first half of 2021 compared with the average monthly rent of over €1,400 at the national level, with the gap being significantly higher in Dublin.

The BPFI monitor found that prices are rising faster in Ireland than the EU average. This is particularly stark in terms of rental prices with the latest Eurostat data showing that average rents have increased by over 85% in Ireland between 2010 and  the second quarter of 2022, the third highest increase in the EU, whereas the increase in average rents during the same period in the EU was 18%.

In terms of house prices, the increase was nearly 50% in the EU during the same period with average prices increasing by over 55% in Ireland.

The BPFI monitor also found that while there has been a significant increase in new housing to the market this year, population growth continues to outstrip supply and in addition to this “we are now seeing a decline in the figures for the commencement of new builds”, Hayes said. 

He added: “Commencement figures of new housing in the first nine months of 2022 were 5.4% higher than in the same period of 2019. However, we see that the commencement activity seems to be declining on an annual rolling basis after peaking at 35,000 units during the first quarter of 2022 to some 26,600 units in October 2022.

“Meanwhile, in terms of population growth, the latest Census figures from the CSO show that, between 2016 and 2022, the housing stock increased by over 120,000 whereas population growth during the same period was over 360,000.”