Sherry FitzGerald flags thousands of properties lost to rental market

Some 6,000 tenancies were lost in the rental market in the first six months of 2023, according to data from estate agent Sherry FitzGerald.

House price growth, meanwhile, continues to slow in the face of higher borrowing costs.

In its latest quarterly report on the Irish property market, the State’s largest real estate agent estimated that the price of a second-hand home in the Republic rose by 3.4 per cent in the 12 months to June, down from a rate of almost 10 per cent this time last year.

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In Dublin, the slowdown was more marked with the price of resale properties up by just 2.4 per cent on a 12-month basis, down from a rate of 8.2 per cent in June of last year.

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Last week rival estate agent DNG estimated the cost of second-hand properties in Dublin had risen by just 0.3 per cent in the 12 months to the end of June.

Both DNG and Sherry FitzGerald base their price measures on a select basket of properties. The official property price register, which is based on actual transactions, put the annual rate of inflation for all property types at 3.6 per cent in April.

Sherry FitzGerald’s report said a review of transaction activity in the first quarter revealed that sales volumes continued to exceed pre-pandemic levels.

Excluding block sales and new homes acquired for social housing, about 12,500 housing transactions were recorded in the first quarter, as per the property price register.

This represents a 2 per cent increase compared to the same quarter in 2022 and an 11.3 per cent increase compared to the opening quarter of 2020, just prior to the pandemic.

Sherry FitzGerald said activity in the second-hand market “remained steady” with about 11,600 units sold, in line with 2022 figures. Dublin and the regional centres exhibited robust second-hand activity, with Dublin experiencing a 16.9 per cent increase in transactions compared to the first quarter of 2022, it said, while noting Cork, Limerick, and Galway reported increases of 10.6 per cent, 5.7 per cent, and 3.5 per cent respectively.

The new homes market displayed continued growth in transaction activity during the first three months of 2023, recording an 11.3 per cent increase. The Greater Dublin Area, encompassing counties Dublin, Meath, Kildare, and Wicklow, accounted for the majority of the sales.

Despite the increase in new home sales, the company warned the challenges faced by the sector, such as the rising cost of materials, “may impede further significant growth in the short to medium term”.

Price inflation

It also noted that the exodus of landlords from the market has continued this year. In the first six months of the year, only 12 per cent of purchasers of second-hand homes through Sherry FitzGerald were investors, while 35 per cent of vendors were investors selling their properties.

This would suggest a net loss of about 6,000 tenancies from the rental market in the first six months of 2023, it said.

“The analysis of the first six months reveals a return to a more normal level of price inflation in the residential market. This comes after two years of heightened inflation in the post-Covid period,” said Sherry FitzGerald managing director Marian Finnegan.

“However, the underlying challenges in the residential market remain, including the risk surrounding output in the new homes sector and a further net loss of 15,000 units from the private rental market,” she said. “Therefore, urgent policy changes are needed to address both the immediate and long-term challenges in the lettings market in order to stabilise the emergency in the rental sector.”