Rents rise 2.1% in first quarter nationally as Dublin trend turns upward again

Average national rents rose 2.1 per cent in the first quarter of 2021 and are 1.7 per cent higher than they were a year ago, while Dublin rents remain lower year on year but have started to trend upward, according to figures from property website Daft.ie.

Outside Dublin, rents rose by 2.9 per cent between December and March and are now 7.1 per cent higher than they were a year ago. In Cork, Galway and Limerick cities, rents are about 6 per cent higher year on year, while in Waterford they are 8.3 per cent higher.

Dublin rents are now on the rise again, climbing 1.2 per cent between December and March, according to Daft’s rental price report, although they are still 3.2 per cent lower than they were in the first quarter of 2020. The impact of Covid-19 continues to be felt especially in the city centre, where the year-on-year decline is 6.5 per cent.

The divergence in the market is a reflection of availability, with the supply of rental properties increasing in Dublin, but falling outside Dublin to the point where it is “extraordinarily weak”.

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There is evidence that supply in the capital is already “not as loose” as it was earlier in the pandemic, however. Some 2,474 properties were available to rent in Dublin as of May 1st, Daft.ie said. While this is still 20 per cent higher than it was on the same date in 2020, the total has dropped from the high of 3,322 seen on December 1st.

With the vaccination programme under way and public health restrictions easing, renters may be “thinking ahead” and making decisions based on where things will be later in the year rather than where they were recently, the report suggests.

The average monthly national rent in the first quarter stood at €1,443, up almost 95 per cent – or a near doubling – since the post-crash low of €742 seen in late 2011. The quarterly gain of 2.1 per cent was the highest seen since mid-2018.

The average monthly Dublin rent now stands at €2,007. In Cork city it is €1,483, in Galway city it is €1,400 and in Limerick city it is €1,293.

‘Different directions’

"The impact of Covid-19 on Ireland's rental market was largely to send Dublin and the rest of the country in different directions," said Ronan Lyons, economist at Trinity College Dublin and author of the report.

But as the economy and society reopens, these differences will likely fade.

“More long-standing problems – in particular chronic undersupply of new rental homes – will be the main driver, within a broader context of economic and population growth.”

Housing policy, particularly as it concerns the rental market, should be "driven by an understanding of the challenges and required solutions, rather than news-cycle pressures", Mr Lyons added, referring to recent media reports of investment funds buying up the majority of homes in housing developments – including one in Maynooth, Co Kildare – and renting them out.

“Limiting the country’s ability to harness foreign savings to build the rental homes it needs – for example, by limiting the ability of professional landlords to invest here – will worsen, rather than improve, the situation,” he said.

"The doubling of rents over the last decade is all the proof needed that Ireland needs to build tens of thousands of new rental homes over coming years."

The Institute of Professional Auctioneers & Valuers (IPAV) said the latest report highlights that only in two of the most expensive areas for property in the country – Dublin 4 and 6 – was repaying a mortgage on a three-bedroom home more expensive than paying rent, and only marginally so.

An ‘impossible situation’

"These figures illustrate the travesty of the situation for young people in particular, many of whom are now approaching middle age and who cannot acquire their own homes," said IPAV chief executive Pat Davitt.

“The solutions thus far are clearly not working and something very different needs to be done to get more affordable homes built.”

National housing charity Threshold said renters and prospective buyers are in an “impossible situation.”

"Approximately half of renters in Ireland are aged between 18 and 34, the age cohort most adversely impacted by Covid-related income loss and unemployment," chairwoman Aideen Hayden said. "The ESRI has warned that these young workers may have lower incomes in the future. These factors, combined with the absence of affordable housing – which forces people to pay way more than 30 per cent of their income on rent and to share with strangers well into their 30s, 40s and perhaps beyond – should be taken as warning signs of a potentially deepening housing crisis. What impact will this have on the life chances of young people facing into a lifetime of high housing costs?"