ON AVERAGE, RENTS across Ireland rose by 0.5 per cent in the first three months of this year, with the average monthly payment standing at 75 per cent of the 2007 peak, or €825, according to the latest report from property website Daft.ie.
Overall, rents have been stable since early 2010 but some parts of Dublin and Cork city have shown increases of up to 3 per cent on this time last year.
In Waterford city, rents are down 6 per cent on average when compared with prices in the first quarter of 2010, while rents in Limerick are down an average of 2.3 per cent.
Cormac Lucey, chartered accountant and lecturer at the Irish Management Institute, said he had expected rents to continue to fall, given the economic climate. Lucey said that the most likely explanation for the stabilisation across rental prices “is that the underlying Irish economy should be able to generate annual economic growth of the order of 3 per cent per annum”:
And, while our economy has suffered some horrendous setbacks over the last few years, the impact of new horrors is now being counter-weighed by the economy’s underlying growth potential. It’s not that things are getting dramatically better. It’s just that bad news is now being counter-balanced by underlying forces of growth in the economy.So, on a net basis, economic activity and related variables (such as rent levels) are now stabilising.
However, Lucey pointed out that Ireland’s “absurdly low rental yields”, which average 4 per cent, suggest that residential property prices “still have a considerable distance to fall”.
“Rent levels have stabilised,” he said, “property prices have not.”
Economist Ronan Lyons, who compiled Daft.ie’s report, told TheJournal.ie that there are still more rental properties available outside the cities than current demand, but that isn’t the case in the cities. Instead, rents are actually going up a little bit in cities.
Lyons said the overhang of between 50 and 100 per cent in the rental market outside the cities is part of the legacy of over-construction, and follows employment trends.
“I think you can tie what we’re seeing generally with the labour market; at the moment, there aren’t thousands of jobs out there, but there are jobs out there. And where are they? They’re in the cities,” he said.
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