9% nationwide rise in cost of renting house

The cost of renting a home rose by 9% nationwide in the past 12 months, with those in Dublin approaching the levels they were at the peak of the boom.

Experts believe rental costs will increase a further 10% over the next two years, with the cost of buying the average family home set to rise by up to 20% over the same period.

According to the latest quarterly rental report by property website Daft.ie, Dublin City saw the biggest annual rise, 14%.

The shortage in accommodation across the capital has seen rents increase by 22% in three years. They are now just 13% below peak values in 2007.

There were 10,000 rental properties advertised in the first four months of this year in Dublin, compared with 18,000 in the same period in 2012.

Rents rose in every county outside Connacht and Ulster. The average monthly rent nationwide is now €888, up €69 from its lowest point in 2011.

Rents rose in all city centres, with Cork and Galway experiencing a 6% rise, Limerick 5%, and Waterford 1%. Rents in Dublin’s neighbouring counties of Wicklow and Kildare also witnessed a significant increase of 9%.

Outside cities, rents rose by an average of 4%, while the number of properties available for rent is now under 4,000 — down from 11,000 two years ago.

According to Ronan Lyons, economist at TCD and author of the report, the housing crisis in Dublin is getting worse and needs urgent government action to address it.

“The solution is not capping rents which will limit the supply of new homes, but rather addressing the underlying problems, in particular streamlining the cost of land and of regulation,” he said.

Speaking to the Irish Examiner, Mr Lyons said that while the most acute shortage of rental accommodation was in Dublin, other urban areas were also affected. “The bigger the city, the most acute the shortage is at the moment, with Dublin leading the way, followed by Cork and Galway,” said Mr Lyons. “Rental prices were still falling in Limerick this time last year but then turned, while Waterford has only started rising in the last three months.

Mr Lyons said that while sale price rises tended to lag behind the rental market, an improvement in credit facilities could see that change.

“More goes into the mix when assessing sales, but they are largely driven by the same factors,” he said.

Mr Lyons said that the supply of homes for sale is so tight and there is such a backlog in demand that while rents in Dublin could rise by a further 10% over the next two years, sales could advance even further. “We would expect sale prices to rise by between 15% and 20% in the next two years,” he said. “Credit conditions should improve and that will push prices up.”

Mr Lyons added that while construction and mortgages were likely to be a huge growth industry in Ireland over the next five years, the Government needed to put in place a framework for lending, including setting maximum loan to value rates.

He said regulations should also be streamlined for the construction industry. “At the moment anyone trying to build faces a host of regulations that fall between the Department of the Environment, the Department of Finance and the Department of the Taoiseach, among others,” said Mr Lyons. “We have a very disjointed approach to housing with no clarity. As well as that, the specific responsibility lies with a minister of state which shows that it is not seen as an important role.”

The impact of rising rents on older people was highlighted yesterday by the charity Alone. CEO Seán Moynihan said the Department of Social Protection has written to those in receipt of rent supplement advising them to negotiate a cut with the landlord if their monthly rental is above the €520 cap for single people.

If people cannot negotiate their rent down, the letter says that they may be “requested to source alternative accommodation”.

“As we know from today’s Daft report, there is practically no accommodation available for €520,” said Mr Moynihan. “People are also too scared to start conversations with landlords in relation to rent as, once they open the lines of communications, they could risk being told their rent is increasing.