Daft.ie report suggests RPZs reduced supply of homes to rent

The daft report shows that 'movers' in the open market saw rents rise almost 40% in five years, while 'stayers' who remained renting the same property saw rents increase by just 13%. Picture: iStock

Rent pressure zones have made the supply of private rental accommodation worse by forcing landlords out of the market, a report has suggested.

The latest Daft.ie study found there is still a major lack of supply in the private sector, and measures to curb rental increases resulted in many landlords selling up.

The report being published on Monday shows that tenants who leave their current home and seek to rent a new home face a major increase in rents when they return to the open market.

The findings include:

• In Dublin, market rents were on average 4% higher in the final three months of 2024 than a year previously;
• Market rents rose by an average of 5.7% during last year, down from 6.8% in 2023;
• The average open market rent nationwide in the final quarter of the 2024 was €1,956 up slight quarter on quarter and 43% higher than before covid-19;
• Inflation in market rents in Dublin continue to converge with rates seen elsewhere in the country.

Report author Ronan Lyons told the Irish Examiner this is “another year of having rent increases”. He said: 

There are two major issues here, there is a lack of supply that was there anyway, and rent controls have made supply worse.

“The big thing is, when you add all these increases in rents in the open market, it is very difficult for people leaving rent pressure zones. While landlords have left or are leaving the market. So again, supply is down.

“We have stayers versus movers, people who stayed put in a rental accommodation long-term enjoyed a 20% increase over time, but to move into the open market there are major increases all the time in rent.

“In a rent pressure zone, you can police your own rents, if you’re lucky to be in one.

“There is a huge political debate now how rent pressure zones can be reformed but there is a huge challenge faced by rents going leaving the RPZ.”

The report also showed that, on February 1, there were fewer than 2,300 homes available for rent in Ireland — down one quarter on the same date a year previously and well below the 2015 to 2019 average of almost 4,400.

Average market rents, and year-on-year change, in the fourth quarter of 2024 were:

• Dublin: €2,481 — up 4%;
• Cork City: €2,097 — up 10%;
• Galway City: €2,197 — up 9.9%;
• Limerick City: €2,271 — up 19%;
• Waterford City: €1,651 — up 7.4%;
• Rest of the country: €1,582 — up 6.2%.

Mr Lyons said: “An acute shortage of rental housing continues to plague the market, driving rents in the open market up and creating a wedge between those that get the benefit from rent controls and those that don’t.

“As the rental crisis enters its second decade, significant reform is needed to rent controls both to avoid a situation where the pressure in the market falls disproportionately on some renters and, more importantly, to ensure new supply comes on stream over the coming years.

“Rising rents are a signal of a shortage of rental housing. The ultimate solution to that shortage is to ensure new rental housing is built. This must be central to housing policy for the new Government.”