Around the Block: Report on London rental market gives pause for thought for Dublin
An increasing number of people in London renting private stock are now spending more than half their earnings on rent
While rents have increased steadily in the capital since 2011, and little sign that they are likely to fall any time soon thanks to a serious collapse in the rental stock available, a report from London during the week gives pause for thought. There, an increasing number of people renting private stock are now spending more than half their earnings on rent. The figures compiled by the Commons Library compared average weekly rents across individual boroughs with average local weekly earnings and found that rents accounted for more than 50 per cent of average wages in 17 boroughs.
The latest Daft.ie rental report shows that in Dublin, rents stand at about 15 per cent below the peak in mid-2007, and around the same level they stood at in 2006, when the average rent in the capital was €1,250. From the lowest point in the cycle three years ago, they have risen 18 per cent. These steep increases are directly linked to the poor supply of available properties to rent. This figure stood at 1,500 properties on February 1st, compared to 6,700 properties on the same date in 2009.
We’re all well used to the argument that London’s property price woes stem from the high density in the city and limited opportunities to improve supply. However, Dublin has no such issues with a large supply of vacant sites. The problem here is the virtual stagnation in provision of new properties.
Meanwhile, numbers renting have doubled in the past 10 years, signalling an increased acceptance of renting as a lifestyle choice. Normal market supply and demand needs to be restored if we are to avoid Dublin following the same route as our UK counterpart, and literally pricing ourselves out of the market.