Property shortage sees tenants paying an extra €900 per year

A chronic shortage of properties has seen rental prices soar outside the capital during lockdown, according to the latest Daft.ie rental price report.

Rental prices outside Dublin were 7.1% higher in the first quarter of 2021 than in the same period last year, costing tenants an extra €900 per year. 

Meanwhile, as demand has eased in Dublin during the pandemic, rents in the first three months of this year were actually down 3.2% compared to the same period in 2020.

Average rents of up to €2k per month 

The average monthly rent in the capital now stands at €2,007. In Cork City, it’s €1,483, a 6.3% increase year-on-year; in Cork county it's €1,137, up 8.7%; in Galway City it’s €1,400, up 6.1%; in Limerick City, it’s €1,293, up 6.3%; and in Waterford City it's €1,097 up 8.3%. 

Overall prices in Munster are up 8.8% year on year.

Rents doubled in a decade

The report shows that the average monthly rent has almost doubled in a decade, from a low of €742 in late 2011 to €1,443 during the first quarter of this year.

It also shows there were just 304 homes for rent on May 1 across Cork, Galway, Limerick, and Waterford — while across all of Leinster, outside Dublin, there were just 392 homes available on that day, the second-lowest figure on record after February this year, since the data was first recorded in 2006.

While availability in these areas has been lower before, it has never happened in May, normally a time of greater supply on the market, the report says.

Warning about restrictions on investors

Economist Ronan Lyons warns that recently-mooted measures to curb foreign investment funds in the Irish property market could dampen down supply of the homes the country needs.

It prompted a warning last night from report author, economist Ronan Lyons, that the chronic undersupply of rental homes needs to be addressed, and any move to restrict international investors in the sector will make the problem worse.

“Limiting the country’s ability to harness foreign savings to build the rental homes it needs — for example, by limiting the ability of professional landlords to invest here — will worsen, rather than improve, the situation,” he said.

The doubling of rents over the last decade is all the proof needed that Ireland needs to build tens of thousands of new rental homes over the coming years.

Housing charity, Threshold, said with a year-on-year drop in the number of homes available to rent nationwide, combined with a lack of affordable homes to buy, prospective first-time buyers remain in an impossible situation.

Threshold chief executive John-Mark McCafferty said the charity is seriously concerned about affordability for single people. Picture: Jason Clarke

“We are seriously concerned about affordability for single people in the rental market with, for example, the cost of renting a double room in Galway City centre up 16% in a year,” Threshold CEO John-Mark McCafferty said.

“Given that Galway City is a designated rent pressure zone (RPZ), it is yet more evidence that the RPZs are not being adhered to.

With the current RPZ legislation due to expire later this year, clarity is needed sooner rather than later as to what they will be replaced with.

The Institute of Professional Auctioneers and Valuers (IPAV) said the report shows that, apart from Dublin 4 and 6, it would be cheaper — almost half the cost in many cases — to service a mortgage than pay rent on a three-bedroom home.

“The solutions thus far are clearly not working and something very different needs to be done to get more affordable homes built,” IPAV chief executive, Pat Davitt, said.

“It requires a whole of Government approach, often talked about but not yet implemented. 

The solutions must include the entire planning process and the entire tax treatment of housing and investors in housing.