The number of properties to rent in the Republic reached a record low while rent prices rose to a new record high, according to a report from property website Daft.ie.
On May 1st, there were just 2,700 homes available to rent nationwide, the lowest ever recorded in a series dating back to 2006 while the average monthly rent increased 8.3 per cent in the past 12 months to €1,366.
The average rent price listed on Daft.ie is now €337 higher per month than the previous peak in 2008 and almost €625 higher than the lowest point in late 2011.
The report's author, Trinity College Dublin economist Ronan Lyons, said the figures do little to assuage the concerns of policymakers, renters and others interested in a healthy rental market.
“The rental market remains plagued by weak supply at a time of strong demand. While the total number of rental homes on the market did improve slightly earlier in 2019, the figures for May have undone all that progress.
“Much of the commentary around new supply for the market is unhelpful, particularly talk of so-called ‘cuckoo funds’ – what in other countries are termed landlords. With the sale market showing signs of greater balance between supply and demand, policymakers must maintain their focus on boosting rental supply.
New apartment blocks
“A key part of that is developers building, and institutional landlords buying, new apartment blocks,” he said, in reference to the burgeoning build-to-rent sector.
While rents in Dublin and Leinster as a whole showed some signs of slowing down, elsewhere rent prices are increasing at double-digit rates with increases of between 10 per cent and 15 per cent in Cork, Galway, Limerick and Waterford cities and increases of 12 per cent on average in Munster, Connacht and Ulster.
In Dublin, rents rose 6.8 per cent and although that was the 31st consecutive quarter of growth, it was the slowest increase since early 2013. Similarly, in Leinster, rents were 7.3 per cent higher than a year ago.
Mr Lyons flagged that if rents were to stay stagnant, then the market needed about 13,000 properties per quarter, or about 1,000 per week. Currently, he said, the Dublin market was getting about half that. To close the gap, about 80,000 properties had to be built in Dublin alone “as soon as possible”.
Across the country, inflation in Galway was the highest at 16.6 per cent over the course of the past year with prices averaging €906. The slowest level of inflation was in Kildare at 5.4 per cent with the average property costing €1,314 per month.
Among postcodes in the capital, Dublin 10 witnessed rapid inflation with a five-bedroom house, for example, now 14.6 per cent more expensive than a year ago at €2,262. For the same type of property, Dublin 2 had the most expensive rent at €3,599, up 6.3 per cent on last year.
Where landlords are concerned, the picture was also bleak, with yields – the ratio of annual rents to the price of a property – falling across a variety of property types. Nevertheless, there were still decent returns in some areas, with the yield on a one-bedroom apartment in Dublin 17 standing at 12.8 per cent. The lowest yield in Dublin was on a five-bed house in Dublin 6 of 2.7 per cent, barely beating inflation.
And yet again, the figures detailed how it is almost universally better in today’s rent environment to buy a property with a mortgage. For example, a three-bed house in Dublin 8 would lead to mortgage repayments of €1,598 using Daft.ie’s metric compared to rent of €2,218. That trend was seen across the country and in Co Mayo, for example, rent on a two-bed house would cost €592 per month while a mortgage on the same property would be roughly €297.