Rent inflation in Dublin is accelerating again amid a slowdown in the construction of apartments, according to property website Daft. Open-market rents in the capital rose at an annual rate of 5.2 per cent in the third quarter to an average €2,476 per month, said the company in its latest quarterly report.
This was twice the rate of inflation seen at the end of 2023.
Nationally, the average open-market rent was €1,955 per month, up 7.2 per cent year-on-year and 43 per cent higher than before the outbreak of Covid-19, said Daft.
Daft linked the acceleration in rents in Dublin to the fall-off in the construction of apartments, which hit a record 9,000 in 2023 but has slipped back since as investment funds exit the market because of the spike in interest rates.
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The data come at an awkward time for the Government in the run-up to the general election, with housing seen as one of the key issues of the campaign.
“Dublin’s apartment boom seems to be coming to an end,” said the report’s author and Trinity College Dublin economist Ronan Lyons, noting the number of apartments completed in Dublin during the first nine months of 2024 was down a quarter on the same period last year.
“During 2023, as Dublin experienced a significant pipeline of new rental homes, it enjoyed very little inflation in rents, as supply and demand were largely in balance,” he said.
“However, the upswing in construction of rental homes in Dublin is over. As the rate of building of rental homes continues to fall, Dublin is likely to resemble the rest of the country, where availability has been incredibly tight over the last three years, leading to dramatic increases in open-market rents,” said Mr Lyons.
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In its report, Daft said rents nationally rose by an average of 1.7 per cent in the third quarter, marking the 15th consecutive quarter in which rents nationwide have increased.
It noted that after 18 months of increasing availability, the number of homes available to rent on the open market was now falling.
As of November 1st, there were just over 2,400 homes available to rent across the State, down 14 per cent on the same date a year previously and well below the 2015-2019 average of almost 4,400, said Daft.
The report showed that in Cork City, the average asking or open-market rent in the third quarter was €2,077, up 10.4 per cent year on year. In Limerick, it was €2,221, up 19.2 per cent; in Galway city, it was €2,189, up 10.5 per; in Waterford city, it was €1,639, up 5.8 per cent while in the “rest of the country”, it averaged €1,586, up 8.3 per cent on an annualised basis.
“When thinking about boosting housing supply, owner-occupied homes and social housing have dominated policymaker attention over the last few years,” said Mr Lyons.
“The new government will have to address the lack of supply of private rental housing early in its term if it is to bring about a change in conditions similar to what Dublin enjoyed in 2023 but across all rental markets,” he said.
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