IRELAND’S RENTAL MARKET has plumbed new depths as the number of homes available has dropped to an all-time low while the rate of inflation in prices climbed to its highest level in at least 15 years, according to Daft.ie.
The property search website’s latest rental report finds that rents in the second quarter of this year climbed to an average of 12.6% higher than the same period of 2021.
This dramatic spike is the biggest increase recorded by Daft since it began carrying out its reports in 2006 and it came as the availability of rental homes dropped to an all-time low.
The average market rent across Ireland between April and June was €1,618 per month. This represents an increase of 3.3% on the first three months of the year and more than double the low of €765 per month seen in late 2011.
In Dublin rental prices jumped 12.7%, marking the first time the rate of inflation in the capital was above the national average since 2018.
The cities of Limerick (17.7%), Waterford (17.1%) and Galway (16.4%) recorded even more eye-watering price jumps, while in Cork city the annual change in market rents was 11.8%. Outside the cities, the average annual increase was 12%.
Average rents and year-on-year change for quarter 2 of 2022:
● Dublin: €2,170 – up 12.7% year-on-year
● Cork city: €1,670 – up 11.8%
● Galway city: €1,663 – up 16.4%
● Limerick city: €1,559 – up 17.7%
● Waterford city: €1,312 – up 17.1%
● Rest of the country: €1,255 – up 12.0%.
‘Unprecedented’
The Daft report notes that – as has been the case over much of the past decade – the jump in rents is driven by a further tightening in rental availability. However, it adds that the scarcity of rental homes has been “unprecedented” over the past year.
There were just 716 homes available to rent nationwide on 1 August, down from almost 2,500 a year ago and another new all-time low extending back to 2006.
In comparison with 2009, rental availability has fallen by a staggering 97% – meaning for every 100 homes on the market 13 years ago, there are just three today.
The report includes an analysis of figures provided by Cortland Consult on the pipeline of new rental homes.
In the past 12 months, the pipeline has increased by approximately 23,000. A total of 13,000 of these are under construction and planning applications have been submitted for 28,000. There has also been a decrease of 17,500 at the pre-planning stage.
The stock of rental homes for which planning has been granted but yet to start construction remains steady at 43,000.
The report’s author Ronan Lyons, Associate Professor of Economics at Trinity College Dublin, said Ireland’s resurgent economy has accentuated the chronic shortage of rental housing.
“While the professional rental sector has added over 7,000 new rental homes in the last five years, this is small relative to the fall of 30,000 in rental listings each year in the traditional rental sector in the same period or the fall of 100,000 listings per year since 2012,” Lyons said.
“The shortage of rental accommodation translates directly into higher market rents and this can only be addressed by significantly increased supply.
“While there are almost 115,000 proposed rental homes in the pipeline, these are concentrated in the Dublin area. Further, while nearly 23,000 are under construction, the remainder are earlier in the process and the growth of legal challenges to new developments presents a threat to addressing the rental scarcity,” Lyons concluded.
Housing charity Threshold said the report – alongside other recent figures around homelessness and renters receiving notices to quit – paint a “dire picture of both the current and future situation for private renters in Ireland”.
“These sustained rent increases continue despite the fact that approximately three-quarters of tenancies are located in Rent Pressure Zones, where annual increases are capped at 2%,” a Threshold statement said.
The group’s chief executive John-Mark McCafferty said people looking to rent a room “have experienced unjustifiable increases in rents”.
“Those renting a single room will pay approximately an extra €100 month compared to last year, at a time when inflation is almost 10%,” he said.
“Threshold hopes to see enhanced supports for renters in the forthcoming Budget, as well as tax changes for landlords which are linked to improved security of tenure for tenants and their families,” McCafferty added.
Sinn Féin housing spokesperson Eoin Ó Broin has said it’s “clear that Darragh O’Brien and the Government have lost control of the housing market”.
“Two years in office and almost a year into his housing plan and Darragh O’Brien is presiding over record highs in rents, house prices and homelessness. Meanwhile, social and affordable housing is well behind target and the private rental sector is shrinking,” Ó Broin said.
He said that Budget 2023 is the Housing Minister’s “last chance to make the level of change required to fix our deepening housing crisis”.
“We need a dramatic increase in funding to deliver 20,000 social and affordable homes every year for the next decade. We need emergency action to reduce homelessness and slow down the disorderly exit of landlords from the private rental sector,” he said.
“It is not clear whether the Minister understands the depths of the crisis he is perpetuating. If we don’t see real change in September then this Government’s days are numbered.”
Social justice spokesperson for the Social Democrats Holly Cairns said the report “shows the depths of the rental disaster”.
“This is unsustainable. Extortionate rents are driving ordinary workers to the brink. This is especially true given the price of everything else – energy, food and fuel – is also skyrocketing in the midst of a worsening cost-of-living crisis,” she said.
“Each new Daft report show rents are being driven to unprecedented highs while supply is slumping to record lows. It is clear that the Government’s housing plan is a failure, but it is renters and those hoping to buy a home who are bearing the cost.
“When will the Government admit that its housing policies are making the rental crisis worse, not better, and outline what it intends to do to address what is now a societal catastrophe?”
Note: Journal Media Ltd has shareholders in common with Daft.ie publisher Distilled Media Group.
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