Irish Rental Report Q3 2016 | Daft.ie

The figures in this latest Daft.ie Rental Report make grim reading for most, including those renting and those in charge of Ireland's housing system. The average rent nationwide rose by almost 4% in the third quarter, equalling the largest three-month increase seen in the second quarter of the year. Combined with other recent increases, it means that the annual rate of rental inflation in Ireland is now 11.7%, the highest recorded by the Daft.ie Report since its series start in 2002.

Rent Trends

For much of the past four-to-five years of rent increases, the story has been about where has been driving the national increase in rents. Particularly in 2013 and 2014, it was Dublin that was responsible for pulling up the national average rate of rental inflation: in mid-2014, rents were 15% higher than a year previously. By late 2015, it was outside Dublin – in particular the other urban markets and the commuter counties around Dublin that were driving the national increases.

Now, however, there is little to choose between Dublin and other markets. The rate of inflation in Dublin rents has increase from 8.2% in late 2014 to 12.1% between July and September. Outside Dublin, the average rate of inflation is 10.9% and is only significantly below this in Connacht-Ulster. And even there, Cavan is an exception. A more detailed analysis points to the same conclusion: rents are rising at double-digit rates in 37 of the 54 markets analysed in the Daft.ie Report, up from just 17 markets as recently as late 2015.

This is having a disastrous effect on social cohesion as well as on Irish competitiveness. The graph accompanying this commentary shows the average rent for a three-bedroom home in Dublin 8 over the last ten years. The tail end of the Celtic Tiger can be seen in the increase from below €1,450 per month to almost €1,650 between mid-2006 and late 2007. After that, though, rents fell to less than €1,050 in late 2010 and early 2011. They did not increase much during 2011 and 2012 and by late 2012 were still less than €1,150. Since then, however, average rents for a three-bedroom home in Dublin 8 have risen dramatically and now stand at €1,800 a month, 10% higher than the previous Celtic Tiger peak.

Rent highs

This rise in living costs of almost three quarters, in less than five years, is a symptom of strong demand for housing – as economic recovery continues and the population continues to grow. But there is nothing inevitable about housing costs rising with demand. That only happens when supply fails to respond. And the complete absence of any meaningful level of construction in Ireland over the past five years is a systemic failure in desperate need of policy solutions.

The shortage is particularly acute when it comes to apartments in the Dublin area. Apartments are a pressure point for demand, as they offer options for downsizers, students and other one- and two-person households. It is this size of households that will form the bulk of new demand, Ireland matches trends in other high-income countries, with dwindling household size.

While there are perhaps political victories in measures to help new families buying newly built three- and four-bedroom houses, Ireland does not lack this particular kind of property. Rather, Ireland has lots of "non-families" in family homes. The best way to bring around a reallocation of housing stock in Ireland – consistent with political reality – is to tempt these non-families out of family homes.

Least and Most Expensive Areas

There are two challenges. The first is mindset, particularly on the part of local authorities. Ireland is not at all immune to NIMBYism and its excuses for pushing development onto greenfield sites, rather than in already built-up areas such as suburbs and market towns. However, it is precisely the densification of our suburbs and towns that Ireland needs.

Local authorities should be required to set targets for particular types of property, including for apartments blocks suitable for older households and for purpose-built student accommodation if relevant. Options for fining them for refusing to allow necessary development should also be explored. When it comes to housing supply, local authorities have a dual mandate: they certainly have a role in protecting the existing stock and amenities. But they, more than any other stakeholder, have a duty to ensure adequate supply of new homes.

The second challenge is construction costs, a topic I have mentioned frequently in recent commentaries to this report. Personally, I would very much like to be able to state that this problem has been, or is on the way to being, solved – if only to allow me to move on to new topics for future commentaries.

However, the scale of the challenge here remains depressing. It has never been viable to build apartment blocks in the vast majority of this country. Where it has been built, it has been due to subsidies (in the case of social housing) or extraordinary tax incentives (in the case of Section 23 disease). There is no more urgent task facing the Minister for Housing, his department and advisers, the Housing Agency and others involved in 'Rebuilding Ireland' than understanding why the costs of building, and building apartments in particular, is so dramatically out of line with our own incomes and indeed with the cost in other countries.

This latest report highlights that, without addressing that, rents will continue to rise and further damage Irish competitiveness and Irish social cohesion.

Rent Trends

Discuss This Article

  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Tuesday November 8, 2016 @09:19AM

    There is an emergency but the authorities are not taking the problem seriously..
    Emergency powers are needed to get the building started now in the urban areas even if it mean CPO and changing the constitution.

    • Reply to this message
  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Tuesday November 8, 2016 @09:29AM

    My 6 flats in Rathmines that houses 6 single men for the last 20 years will be sold because there are so many regulations and inspections.
    It will be a private house and where will these 6 men go.Their rent is now 115 per week for a 1 bed with 2 large rooms.the State will need to house them now.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Tuesday November 8, 2016 @02:09PM

    The stigma surrounding the construction sector is beginning to bite.

    • Reply to this message
  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Ed B Date: Tuesday November 8, 2016 @02:15PM

    So supply is short, what's the answer to any rational person? Increase supply by incentivising landlords back to the market. What does the government do? Nothing.....I looked into becoming a landlord instead of selling my apartment and not worth is. You cannot make money even when you have to charge to cover all the associated costs. I am of the opinion that the Government has prioritised maximising yields for vulture funds (who pay zero tax) and ensuring property prices continue to skyrocket so the banks clear their books and people feel better about no longer being in negative equity....The simply do not care about the people end of....

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Ruth Date: Tuesday November 8, 2016 @02:48PM

    This is ridiculous. I graduate next year and thankfully I'll have the means to leave Ireland. Doesn't matter if there are more jobs here - I'll save way more money living elsewhere in the world. This is driving young people out of Ireland.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: james Date: Tuesday November 8, 2016 @04:40PM

    We need more apartments, built to last, with facilities around them rather than vast housing estates miles from anywhere where we have to drive everywhere.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Martin Date: Tuesday November 8, 2016 @10:38PM

    It is ridiculous to pay 1800 Euros a month for 2 bedroom apartment. Thats one person monthly income!! I have two kids with my wife, adding creche fees, which is 1600 Euros a month I have nothing to save. We are surviving from month to month... spending our savings... Its time to leave this country I am afraid....

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Wednesday November 9, 2016 @01:50PM

    The government need to react now. Nobody is able to pay raises in rent when the income doesn't raise up. The counties need to sell county-owned ground to low prices to people who want to build a house and live in it and the government need to give low cost mortgage's for them. Furthermore this ridiculous rules for "local needs" need to be revisited.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Wednesday November 9, 2016 @11:37PM

    Rents have to be capped. Where is the great housing plan? When the American companies pull out of the IFSC and go back home for the 15% tax rates the rents will drop because no workers can pay IT type rents.

    • Reply to this message
  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: The Greedy Landlord Date: Friday November 11, 2016 @03:40PM

    Landlords have been the but of all the government attempts to tackle the housing issues. Higher tax ,fixing rents, cant refuse social tenants,property tax,PRTB payments etc. All the time forcing Landlords into situations where there is no profit anymore.

    All the while tenants can remain in a property and not pay rent for years in some cases.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Friday November 11, 2016 @04:17PM

    Most of the people complaining about the rent hikes never paid a mortgage, probably getting HAP or renting from Cluid for 12 euroes a week. Don't blame landlords, blame yourself for not buying a house.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Timothy Date: Saturday November 12, 2016 @06:43PM

    I would gladly buy a house and not be dependent on a landlord but unfortunate the banks wont give me a mortgage and I cant save any money because I'm being forced to pay huge rents.
    and to make matters worst my landlord is kicking me out so he can put new people in with a much higher rent.
    He only just raised the rent by 300 per month a few months ago and can get more now

    • Reply to this message
  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Timothy Date: Saturday November 12, 2016 @06:43PM

    I would gladly buy a house and not be dependent on a landlord but unfortunate the banks wont give me a mortgage and I cant save any money because I'm being forced to pay huge rents.
    and to make matters worst my landlord is kicking me out so he can put new people in with a much higher rent.
    He only just raised the rent by 300 per month a few months ago and can get more now

    • Reply to this message
  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Disilusioned Landlord Date: Sunday November 13, 2016 @01:22PM

    I am tired listeninig to people moaning and groaning about landlords.Having endured a tenant who would not pay rent for almost 12 months, thankfully the Social tenant eventually vacated , however not before trashing the place first. PRTB were not interested in pursuing the matter further as tenant is a person of no real means. Thankfully I now have my house sale agreed , having spent thousands of euros to retutn the premises to showhouse condition.Landlords are not compensated for these expenses so like many other private landlords , I am exiting the market...leave it to the vulture funds.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Jessica Date: Tuesday November 15, 2016 @08:59AM

    Many landlords have commented here about the costs associated with bad tenants, yet I am a model tenant and still get extortionate rent hikes, absentee landlords and properties I'm living in being sold - without me in them.

    A good idea to regulate rental prices would be to correlate them with the mortgage payments, allowing a small margin of profit, referencing square footage, and also taking into account average monthly income for the city or county.

    It's out of hand as it is with prices allowed to be set at pretty much wherever landlords collectively feel they should be, based solely on how desperate people are to find somewhere to live.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Anonymous Poster Date: Thursday November 17, 2016 @01:16PM

    The problem for landlords is also mortgage interest relief. Imagine making a loss on your properties and still paying tax!!

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Bobby Date: Tuesday November 15, 2016 @09:15PM

    When will landlords / untalented entrepreneurs stop bleating about 'bad tenants'? It is not the fault of the tenant that your failed investment has not quadrupled in value. All I hear on here is landlords complaining about people who don't pay rent, what about landlords who provide rubbish furniture, fix things when they feel like it, or don't even bother if the cost of fixing something exceeds their idea of a 'fair profit'. There is little more pathetic than the failed landlord who can't see that they are in the wrong 'arena'.

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  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Moh Date: Thursday November 24, 2016 @11:19AM

    It is really bad, I am looking for place since August but either there is no places in Kildare or when agent/landlord hear my name that's its non Irish they say sorry the place is gone or excuse that nephew of that landlord took a place.

    I have family and I don't know where to go look for help.

    • Reply to this message
  • Re: Irish Rental Report Q3 2016 | Daft.ie

    Posted By: Matthew Date: Friday November 25, 2016 @10:48AM

    Are rental prices expected to continue to rise?

    • Reply to this message

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