Rents at lowest level for 10 years

Rents have fallen to their lowest level in a decade to an average of €771 a month, the latest property report revealed today.

Housing website Daft.ie recorded a 4% fall in the last three months with the Dublin market hit harder than anywhere else.

Ronan Lyons, Economist at Daft.ie, warned that the continued drop could disrupt the Government's plan for bad-bank Nama.

"These recent falls in rent have pushed the average rental income back to levels last seen in 2000, which has much wider implications," he said.

"Nama was predicated on rents and yields remaining high between now and 2020."

Mr Lyons warned that the bad-bank plan was based on property prices growing by 10% and that the housing market would be less attractive to investors if rental values continued to fall.

"Currently the yield on residential property has risen by just 0.1% in the last year, to 3.4% on average, compared to the Nama benchmark of 6%," Mr Lyons said.

Rents fell by more than 18% in the year to October 2009, with average monthly rent across the country now down from more than €1,000 last year to under €775 last month.

Dublin continued to show the biggest falls in rent coming down by 5% over the last three months, the report found.

It said rents in Galway remained static, while rents in Cork and Limerick cities fell by 2.5%.

Waterford fell more sharply, down almost 4%, while elsewhere around the country, rents fell by an average of 3.8%, Daft said.

"The more rents go down this is bad news from a Nama long term economic perspective," Mr Lyons said.

Daft said the total number of properties available to rent last month was almost 10% lower than in July with the vast majority of the fall driven by Dublin.

"While the number of properties available to rent is still at an all-time high, it would appear that these latest price falls are starting to have a positive effect on supply," Mr Lyons said.

"In Dublin, where drops have been higher than average, the total number of properties available to rent fell by almost 8% in the past three months alone."

The Daft Rental Report is based on an analysis of all rental properties advertised on Daft.ie since January 2002, including more than 130,000 postings since January this year.