Availability of rental properties 'at one of the lowest levels ever', survey shows

The report from the Society of Chartered Surveyors Ireland also found a large affordability gap in some counties. File picture

New homes remain unaffordable for first-time buyers in several counties and landlords selling up will continue to take properties off the rental market in the coming years, estate agents have warned.

The survey compiled by the Society of Chartered Surveyors Ireland (SCSI) found that property price inflation will likely stabilise this year, going from double-digit rises last year to 2% in 2023.

The SCSI’s new report has also highlighted the large proportion of rental properties coming on the market. On average, around 40% of residential sale instructions to agents in the fourth quarter of 2022 were from landlords looking to sell their investment property.

“Of course, the trend of private landlords exiting the market has serious implications for the supply of rental properties,” John O’Sullivan, SCSI's practice and policy committee chair, said.

“SCSI agents are reporting that the supply of available units to rent is at one of the lowest levels ever experienced and they don’t believe the situation is set to improve in the short term.” 

He said that eight in 10 estate agents surveyed are of the view that individual buy-to-let second-hand rental units that are now being sold will not be replaced in the rental market for at least the next two years.

The exodus from the rental market comes as residential property values “have increased exponentially” in the past number of years. “[But] increases of that magnitude are simply not sustainable and a return to a more stable environment is welcome in terms of affordability,” he said.

What's your view on this issue?

You can tell us here

Mr O’Sullivan said high construction costs have also fuelled property inflation. If values plateau or fall during a period of high construction inflation, “many projects may stall or not commence and that is a real concern given the current housing crisis”, he said.

The SCSI said it fears that housing completions this year may be directly impacted by the decline of commencements and planning permissions.

It said that new housing completion will need to increase by 8% each year through to 2030 to have a chance of meeting the Government’s Housing for All targets. Achieving that supply, however, may be challenging giving the issues at present.

Affordability gap

The report also found a large affordability gap in some counties.

In Wicklow, it took the average price of a new home and found that a couple both earning an average salary would have an affordability gap of €73,750 between the cost of the home and how much they could borrow along with a 10% deposit. This affordability gap is €26,500 in Kildare.

However, the report also highlights that a couple on an average wage looking to buy in Cork would be able to afford a new home there provided they had the deposit.