Renters paying €500 more every month than buyers

Renters paying €500 more every month than buyers

With rents at a record high and availability at a record low, renters are now having to pay up to €500 more every month than those who are paying a mortgage.

The latest rent report from property website Daft.ie has laid bare the harsh realities of the Irish rental sector.

Rents have now increased for 13 consecutive quarters, with students, young professionals, and families alike continuing to have great difficulty in securing rental accommodation nationwide.

In Limerick City, for example, the average rent is €1,182. That compares to an average mortgage of €675.

In Waterford, renters are paying 67% more than mortgage holders, while in Cork City, they face spending 47% more, with average rent at €1,358, compared to €923 per month for a mortgage.

In Galway, renters spend an average of €1,258 — 40% more than the average mortgage payment of €901. 

In Dublin, it is more than €2,000 per month — an average mortgage is €500 less.

According to the report, the average rent rose by 6.7% nationwide in the year ending June 2019.

While it is the lowest rate of inflation since 2013, the average now stands at €1,391 per month — that is €361 per month higher than the previous peak in 2008.

Rents in Dublin are now 40% higher than their peak at the height of the Celtic Tiger. The average in the city is now €2,023 per month, an increase of 101% from its lowest point in 2011.

In Cork city, rent has increased by 7.9% to €1,366. Average rents in Cork county, Waterford City, and Limerick City are all more than €1,000 per month, too.

The slowdown in the rate of rent inflation is largely driven by Dublin, where it has declined from 13.4% this time last year to 4.5% this year. 

Similarly, in Cork, rents are now 7.9% higher than a year ago, while in Galway City, they are up 9.1%. In Limerick and Waterford cities, inflation is over 10%.

Outside the major cities, rental inflation varies from 6.2% in Leinster to close to 12% in both Munster and Connacht-Ulster.

Rising rents are largely driven by a lack of available stock, the report states.

On May 1, there were just 2,700 homes available to rent nationwide — the lowest number since Daft.ie started recording the data in 2006.

While the number has increased in the months since, many issues remain.

In Dublin, on August 1, there were 1,500 properties available to rent, 10% more than on the same date a year previously — but in the rest of Leinster, there were just 611, the third-lowest total recorded by Daft.

Renters paying €500 more every month than buyers

In Munster, there were 661 homes to rent, a slight increase from the same date a year previously, but still the second-lowest August figure recorded since 2006.

Ronan Lyons, economist at Trinity College Dublin and author of the report, said the cooling-off in inflation is a positive for renters, but without significant increases in supply, rent will remain too expensive for many.

Mr Lyons said the advent of build-to-rent properties should make a significant impact, but that many of these projects are several years away from completion.

According to the Daft.ie report, there are 3,588 units under construction at present. There are plans for a further 9,453 units, pending planning approval, with almost 8,000 in pre-planning.

Housing charity Threshold said that renters are now being pushed to the margins of cities to find accommodation they can afford.

“Evidence suggests that our key workers are being pushed further, beyond the city boundaries, to source accommodation,” it stated.

Housing Minister Eoghan Murphy said: “Rent pressures and the insecurity this is causing for people is very much a priority for the Government because rents are still too high.

“The period covered in this report was before the significant changes introduced in the Rent Reform Bill earlier this year and passed in June. 

"These reforms strengthen rent pressure zones considerably, remove a number of opt-outs, and give new legal powers and resources to the RTB to enforce rent controls.”

- Additional reporting by Conall Ó Fátharta

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