Rents drop 17% over 12 months

RENTS HAVE dropped by an average of 17 per cent over the past 12 months, with a record number of available rental properties bringing the average national rent down to €800, according to property website Daft.ie.

The Daft.ie rental survey for the second quarter of 2009 shows that rents across all major cities continued to plummet, with the supply of properties to rent peaking in July.

Rents in Dublin fell by up to 7 per cent over the second three months of the year compared to the first quarter, while rents in Cork and Limerick fell 5 per cent over the same period.

Ronan Lyons, economist at Daft.ie, said the total number of properties available to rent at any one time had risen steadily on the website over the past two years and hit a record 24,000 last month – three times the seasonal average. “As landlords compete for tenants in a market where supply exceeds demand, these falls in rents are to be expected,” Mr Lyons said.

Since the peak, the number of properties available to rent has dropped back slightly, which Mr Lyons said could ease downward pressure on rents.

Buy-to-let investors, many of whom are in negative equity on their properties, may still find it difficult to secure rental income due to the intense competition for tenants. On August 1st, 2007, Daft.ie advertised 6,200 properties that were available to rent nationwide.

On August 1st, 2009, that number was 23,400 properties – almost four times as many.

The prices paid by tenants for accommodation has dropped every month since early 2008.

In early 2008, the average rent in Dublin was more than €1,300, but by July 2009 that had fallen to just over €1,000. Cork has seen a similar 20 per cent fall, with the average rent in the city now below €850.

Across the State, rents are typically 15 to 20 per cent below their peak, with urban areas experiencing the greatest percentage falls. In rural parts of the State such as Kerry and Donegal, the fall in average rents has been closer to 10 per cent.

Mr Lyons said that, while it was clear supply issues were dragging rents down, there was evidence that short-run pressures on investors at the top end of the property market were forcing them to slash rents.

Areas that have experienced the sharpest decreases in asking prices, such as south Co Dublin, have recorded bigger rent reductions than regions such as Munster and Connacht, despite a smaller increase in supply.