Residential rents remain static

RENTS ON residential properties across the State remained static in the second quarter of 2011, although there was some divergence in the major cities, with Cork reporting a 5 per cent annual increase.

According to the latest Daft Rental Report, which includes an analysis of 45,000 properties posted for rent between May and July 2011, the average asking rent in Ireland is now € 823 a month, the same level as this time last year.

In Dublin, rents have largely held up despite supply soaring by as much as a third. In Dublin city centre, the average rent is now €987, up 0.3 per cent on the same time last year, while properties in south Dublin recorded a 1.3 per cent year-on-year average increase, up to €1,306.

In the rest of Ireland, rents were largely static when compared with last year, although there was a slight increase on the first quarter of this year.

In Galway, rents have remained at last year’s level of €755, although there was a slight 1.1 per cent increase on the first quarter of this year.

In Waterford the average rent is now €645, a 2.1 per cent decline on the second quarter of 2010, while in Limerick city, the average rent of € 690 indicates a 1.6 per cent decline on last year.

However, Cork city reported an increase of 1.8 per cent when compared with the first quarter of this year, bringing the annual change up to almost 5 per cent, at € 885. Elsewhere rents are down by about 2.6 per cent on average.

In 2010, rents started to rise again on the back of declining supply as people chose to rent rather than buy property. Since then, however, there has been a significant increase in the number of properties available to rent, with the supply up by a third across Ireland’s five major cities, from 6,000 on May 1st to 8,000 at the start of August. This may push rents down once more.

“It remains to be seen whether the increase in properties will push rents down,” said Ronan Lyons, economist with Daft.

For investors, the average yield on a Dublin city centre property is now 6.2 per cent, up by 1.6 percentage points on the second quarter of 2010.

Elsewhere, however, yields remain either at or below 5 per cent. However, Mr Lyons expects yields to continue to rise over the next two years.