Cantillon: Rents keep rising as too few homes built

The upward march of rental costs in Dublin shows no sign of abating. Rent continues to rise – up 30 per cent in some parts of the capital in the last five years.

While there have been lots of surveys on rental costs in Dublin, we now have absolute comparison figures too. Irish Residential Properties Reit said rent for its Dublin apartments, in areas such as Sandyford, Inchicore, the Docklands and Smithfield, have risen 27 per cent in the 12 months to June 30th 2015.

The average monthly rent for the group increased to €1,364 per apartment as of June 30th, up from €1,250 per apartment in December 2014 and €1,070 per apartment in June 2014.

To put an apartment rent of €1,364 in perspective, the average was €1,289 at the height of the property bubble in 2007, according to the Private Residential Tenancies Board. The rising costs are against the backdrop of a shortage of rental accommodation in the capital, with little to no new developments being built.

The city needs about 5,600 new houses a year, but last year under 2,800 homes were built. Just last week, a €70 million housing scheme planned for south Dublin by developer Michael O’Flynn was refused planning permission.

The council said the proposed development was “contrary to the proper planning and sustainable development of the area” and could “seriously injure the amenities or depreciate the value of property in the vicinity”.

It would seem the Government is also struggling to develop a working strategy to tackle supply in the capital. It unveiled Construction 2020 last year, pledging to streamline planning and appeals to ensure building projects get underway quickly and vacant sites are not left idle. It also announced a social housing strategy. This came after Dublin City Council’s homeless executive revealed record numbers of rough sleepers.

At the same time, the Central Bank of Ireland’s overhaul of mortgage-lending rules is making it harder for people to buy homes, meaning more are renting.