Rents begin to stabilise around country

RENTS nationally stabilised in the first three months of the year — increasing by just half of 1%.

In Cork city and some parts of Dublin, residential rents are now up to 3% higher than the same time last year, while in Galway city, they are largely stable. In Waterford city, they are 6% lower, while elsewhere in the country, rents are 3% to 4% lower than this time last year.

The total number of properties available to rent nationwide has risen slightly, but at 17,000 is well below its mid-2009 high of almost 24,000.

Nationwide rents rose by half a percent on average in the first three months of 2011, according to the latest report published by the property website, Daft.ie.

The average rent nationwide now stands at €825, 25% below the 2007 peak.

Daft.ie economist Ronan Lyons said: “The latest figures confirm the first signs of stabilisation in rents which emerged from Dublin and Cork in early 2010. However, while rents are rising in some urban centres, there is still significant overhang in other parts of the market pushing down rents.

“What we may be seeing is the emergence of a two-tier rental market, reflecting different levels of property oversupply around the country and, indeed, different labour market outlooks.”

Rents have been largely static since early 2010 and rents in Dublin have now risen in three of the last four quarters, whereas rents continue to fall outside the main cities.

Lecturer at the Irish Management Institute, Cormac Lucey, said rent levels have stabilised but property prices have not.

He said the fact that rents do not appear to have dropped in 2010 raises an important question: why have rents stabilised despite an enormously challenging economic environment?

“The most likely explanation is that the underlying Irish economy should be able to generate annual economic growth of the order of 3% per annum.

“And while our economy has suffered some horrendous setbacks over the last few years, the impact of new horrors is now being counter- weighed by the economy’s underlying growth potential. It’s not that things are getting dramatically better. It’s just that bad news is now being counter-balanced by underlying forces of growth in the economy,” he said.