Rents rising at the fastest pace since records began
Rents are rising at their fastest pace since records began, according to the latest report from property market website Daft.ie.
They were up by an average of 3.4% in the first three months of the year, 'one of the largest three-month increases in the last two decades', the report says.
The average 'open-market rent' nationwide in the first three months of the year was €2,023 per month, up almost €200 from a year ago. It is also nearly three times as high as the Daft.ie report low of €765 in 2011. Pic: Crispin Rodwell/Bloomberg via Getty Images
Rents are also 48% higher than before the outbreak of COVID-19 in early 2020. In the year to March, market rents rose by 5.8% in Dublin and by 8.6% elsewhere, the smallest gap in inflation rates in two years.
After a period of subdued pressure on rents in Dublin, due to a large volume of new rental housing coming on the market, inflation in the capital is converging with price rises elsewhere.
The sharpest rise was in Limerick city, up more than 20% to €2,405. In Waterford, market rents in March were up 9.9% year-on-year, while in Cork and Galway cities, they were up 13.6% and 12.6% respectively. Pic: Education Images/Universal Images Group via Getty Images
Outside the big cities, rent in Leinster and Connacht-Ulster is up just over 5%, while rents in Munster were 11.5% higher.
There were just more than 2,300 homes available to rent nationwide on May 1, down 14%. This is the third lowest total for May in 20 years and close to half the 2015 to 2019 average for availability of homes to rent.
Trinity College Dublin economics professor Ronan Lyons, author of the report, pointed out that the average open-market rent nationwide exceeds €2,000 a month for the first time, up from less than €1,400 just five years ago. Pic: Leah Farrell/RollingNews.ie
Mr Lyons added: 'The sustained increases in rents in the open market are being driven by an acute and worsening shortage of rental housing.
'Unfortunately, changes made to rent controls in 2021 dramatically reduced the ability of Ireland's rental sector to attract the capital needed for new supply, the ultimate remedy for the shortage.
'The opportunity exists for the Government to reform those controls and facilitate the emergence of a new pipeline of rental homes. Nonetheless, further supports will be needed to encourage new rental supply outside of the Greater Dublin Area.' Pic: Shutterstock
He added: 'The irony is that the last Government scrapped pro-supply policies just as they were beginning to show their effects – with market rents in Dublin largely static in 2023, due to lots of new completions, even as rents surged in other cities.
'Instead, policy relied on increases in direct funding, rather than channelling others' savings, to try to keep completions up.
'The results have been predictable, if very disheartening. Having risen by almost 7% in 2023, the national average dragged down by Dublin's new supply, market rents rose by a further 6% in 2024. Pic: Getty Images
'That's 13 straight years, since 2011, of rising rents.'
Countrywide, market rents rose by an average of 3.4% between December and March. This is the joint-second largest increase in market rents (after 2022 Q3) on record, in a series of records that goes back 19 years.
Prof Lyons added: 'The national rate of inflation in market rents – at 4.9% – is at its lowest rate in three years and down dramatically from the 14.1% that had been recorded in mid-2022. Pic: Getty Images
'Meanwhile, the availability of homes to rent in Dublin had almost doubled, year-on-year, in late 2023.
'On October 1 last, there were almost 1,500 homes available to rent in the capital compared to just 800 on the same date a year previously.
'Since then, the availability of rental homes in Dublin has fallen, rather than risen, although at least some of that is seasonal. There were just over 1,200 homes available to rent in Dublin on May 1, up only 4% year-on-year.
'This represents the good news. But even then, the good news is not about rents becoming more affordable, after a decade of almost uninterrupted growth.
'Rather it is about rents increasing at a slower rate than in recent years. For more rents to become more affordable, there needs to be a greater supply relative to demand. But while demand has grown, supply remains very tight.
'This is true even in Dublin, where, according to the analysis in this report, over 125 purpose-built rental developments [that have been] opened since 2016 have added over 10,000 new rental homes,' Prof Lyons concluded.
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