Rents across Ireland are set to rise by between 7% and 10% as families choose to rent instead of stepping onto the property ladder, according to Savills Ireland.
Savills said its analysis of the market had found that since 2008 rents have fallen almost 25% but the market has turned and is set to rise in the next two years.
Clarie Neary, Savills letting manager, said there was still strong demand for properties in south Dublin.
“Demand remains particularly strong in prime locations with rents rising between 5% and 7% for properties in Dublin 2 and 4 since this time last year. Rents remain solid in Dublin suburbs with demand and rental levels remaining stable over the past 12 months.”
The typical rents in these locations for a two-bed apartment vary between €1,000 and €1,400 per month, with €1,200 the average, the analysis found.
These rents are expected to rise about 7% with three-bed homes in suburban Dublin expected to rise by 10%, Savills estimates.
Ms Neary said: “We forecast that rents will increase by 7% in the next two years in the more popular residential areas. The number of families choosing to rent as opposed to purchasing has increased dramatically over the past five years which has led to a particular shortage of houses in the rental market.
“An average three-bedroom house in a suburban location in Dublin is currently achieving between €1,500 and €1,700 per month but we predict this will increase by 10% in the next two years.”
In other cities, Savills said there was an emerging shortage of properties for young families to rent and, with demand outstripping supply, the rental prices are being driven up.
Savills also found that the shortage of mortgage finance has forced couples into renting even where they have good jobs.
“Property values are already beginning to bottom out in many locations, and although people are recognising the value in the housing market many cannot secure the finance to buy. They will therefore continue to rent in the medium term until the supply of mortgage finance improves. The two are inter-related and when mortgage finance begins to improve again, there will be a move back to purchasing,” said Ms Neary.
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