Average rents across Ireland have soared to an all-time high

SOARING RENTS ARE having a “disastrous effect” on social cohesion and the country’s competitiveness as the cost of housing continues to rise.

Rents rose nationwide by an average of 11.7% in the year to September 2016, according to the latest quarterly rental report from property website Daft.ie.

This is the largest annual increase in rents ever recorded in the Daft.ie report, which extends back to 2002. The average rent in Ireland during the third quarter of the year, between July to September, was €1,077 – also an all-time high for the report.

Annual rental inflation in Dublin was 12.1%, its highest rate since late 2014. This reverses a trend from late 2015, when rents outside of Dublin had been increasing at a faster rate than those in the capital.

Ronan Lyons, Trinity College economist and author of the Daft.ie report, noted that there is now “little to choose between Dublin and other markets”.

The year-on-year change in rents across Dublin

“The rate of inflation in Dublin rents has increase from 8.2% in late 2014 to 12.1% between July and September,” he said.

“Outside Dublin, the average rate of inflation is 10.9% and is only significantly below this in Connacht-Ulster. Even there, Cavan is an exception.”

The year-on-year change in rents across the country

‘Disastrous’

He added: “This is having a disastrous effect on social cohesion as well as on Irish competitiveness. 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 average rent Irish rent has risen by 45% since bottoming out in late 2011, and is now almost 5% above its peak near the end of the Celtic Tiger.

Daft.ie report author Ronan Lyons

There were just over 3,600 homes to rent nationwide at the start of October, 12% fewer than on the same date a year previously

Challenges

Lyons said that there are two main challenges to building more housing units.

“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,” he said.

“However, it is precisely the densification of our suburbs and towns that Ireland needs.”

He added: “The second challenge is construction costs. 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.

“There is no more urgent task facing the minister for housing 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.”

Fora.ie is part of Journal Media Ltd, which has some shareholders in common with shareholders in Daft.ie.