Rental supply at an all-time low as prices up 5.6% on 2020

The average monthly rent stood at €1,477 in the second quarter of 2021, up 2.4% on the first quarter and almost 99% up from a low of €742 per month seen in late 2011. File picture: Sam Boal / RollingNews.ie

National rental prices are 5.6% higher than this time last year, driven by supply hitting an all-time low, a new report has found.

Daft’s latest quarterly report found national rents had the strongest year-on-year increase since mid-2019.

The average monthly rent stood at €1,477 in the second quarter of 2021, up 2.4% on the first quarter and almost 99% up from a low of €742 per month seen in late 2011.

The average rent in Dublin is €2,035 per month, followed by Cork city at €1,524 and Galway City at €1,443.

Cities outside Dublin have seen significant price spikes. 

In Cork, Galway and Limerick cities, rents are between 9% and 10% higher than a year ago, while in Waterford, they are nearly 12% higher.

Outside the cities, rents rose by 8.6% in Leinster, by 13.7% in Munster and by 14.7% in Connacht-Ulster.

With rental inflation ranging from -7% in Dublin 2 to +17% in Kerry, the current market exhibits greater spread than at any point in the last 15 years.

Scarcity of rental properties

The price hikes were driven by the scarcity of available rental properties, the report found.

Only 2,455 rental homes were available across the country during the second quarter of the year, the lowest number on record since the series began in 2006.

On average over the past 15 years, there have been nearly 9,400 homes available to rent at any one time, while the 2015-2019 average was almost 3,900.

While the number of homes available to rent in Dublin is down 44% year-on-year, it is close to levels seen in 2019.

Outside Dublin, however, there were just 789 homes available to rent, by far the lowest on record – prior to 2020, the lowest level had been just below 1,500.

Outside the cities, rents rose by 8.6% in Leinster, by 13.7% in Munster and by 14.7% in Connacht-Ulster. File picture: Sam Boal / RollingNews.ie

Ronan Lyons, assistant professor of economics at Trinity College, and lead author of the report, said the “best predictor of rental trends is availability”.

“There were just 2,455 homes available to rent on August 1 this year. This is the lowest on record, an extraordinarily low figure for a country of Ireland’s size,” he said.

“Ireland’s rental sector is something like 50% larger now than 15 years ago but the availability of homes to rent online is half of what it was then."

He added: "The underlying pressure on Ireland’s rental system is intense and the supply shortages are chronic and worsening.” 

Mr Lyons said the problem cannot be solved by ”simplistic rent controls, which will at best hide the problem”.

“To solve this, instead of wishing the problem away, new rental homes must be built. For this to happen, costs must be brought down,” he added.