Young professionals complain they work long hours and often weekends to service other people's debt repayments - welcome to the investor's market! As property values soar, rents for prime city centre apartments escalate in tandem.
Dublin city centre rents have increased by an average of 45 per cent in two years, according to leading letting agencies. In a city where demand far outstrips supply, one-bedroom properties that would have rented for £450 two years ago are now £650 per month.
Cork has also experienced this dramatic rental rise, with rents up by 65 per cent. Two-bedroom apartments in the city centre which would have been priced at £450 to £500 a month one year ago are now achieving £600 per month. Limerick and Galway have seen increases of 10 per cent to 15 per cent, but local estate agents term this as "a nominal increase, nothing too dramatic".
One year after the publication of the second Bacon report, which sought to address the availability of affordable housing and tenant issues, the situation in the rental market has not improved.
Property values continue to soar, pricing the younger population out of the market and putting increased pressure on the supply of rental accommodation.
One of the most significant contributory factors behind escalating rents is that as the capital value of a property increases in boom times, so too does the rental value. Investors are aware that in this current climate they can achieve a very high return on their investment.
While rents tend to rise by approximately 10 per cent between lettings and renewal of leases, it would be simplistic to say that escalating rents are the result of unscrupulous landlords looking to make a fast buck.
Rental values are determined by market forces and as Carina Warner, manager of Hooke & MacDonald's residential lettings division says, "no matter how buoyant the market is, unless a property has a realistic rent on it, it will lie unlet for a much longer period".
A slowdown in construction, especially in Dublin city centre, has resulted in investors returning to the apartment market in increasing numbers to capitalise on the sharply increased rents. The shortage of new homes is also another contributory factor and has effectively priced many young people out of the property market. This means that people are renting for longer periods of time, putting increased pressure on the supply, resulting in further escalating rental prices.
Latest figures available from the Central Statistics Office show that the population of 3.74 million calculated in the census of April, 1999, was the highest recorded since 1881. Immigration into Ireland is estimated at 47,500 a year, with 55 per cent of those Irish nationals. The statistics also show that the numbers of people in employment is at an all time high. All of these statistics have a trickledown effect on the rental market.
Economic development and the availability of quality jobs has resulted in a high percentage of people moving to the major urban centres, many looking to rent. Galway has traditionally had a more transient rental market - students in the winter months, tourists in the summer. Cliona Mulcahy of Homeseekers says that one and two-bedroom apartments in the city centre are in huge demand but inshort supply. "One-bedroom apartments are particularly in demand and there are very very few of them. Developments here mainly have two-bedrooms units."
Modern apartments in the city centre, particularly those on the waterfront, rent from around £500 upwards. At the Dun Aengus apartment development in a restored grain store on the water, two-bedroom units rent for around £650 per month.
The establishment of high technology companies such as Cambridge BioTech, Nortel and APC in Galway has had a significant impact on the rental market, as there has been a large influx of people into the area. "Rental values for city centre properties have increased by 10 to 15 per cent in the last two years, and there is nothing unusual in this rise," she says.
However, increasing rents have resulted in families moving out to towns within a six-mile radius of the city, to Oranmore, Moycullen and Bearna, where they can rent a semi-detached house for between £550 and £600 permonth.
THE arrival of US computer manufacturer Dell in Limerick has resulted in huge demand for rental accommodation in itscity centre. "A few years ago there was a large number of apartments, and it was a case of excess supply and no demand, but the establishment of Dell and the growth of industry in Shannon have resulted in huge demand," says Pat Gleeson, from DeCourcy Auctioneers in Limerick. Apartments in new developments on the centrally located Dock Road rent from £350 per month for a one-bed and £450 for a two-bedroom property.
Residential lettings manager at Lisney, Joan Fogarty, says that escalating rents are very much the result of a shortage of houses and apartments. "What we are now seeing is a shortage of accommodation at under £1,000."
Industrial expansion in Cork, in particular in the highly skilled pharmaceutical and technology sectors, has brought in huge numbers of people, especially foreign staff relocating. Niamh O'Donovan from Acorn Property Management says corporate lettings now account for a high percentage of Cork residential lettings and she estimates there has been an 80 per cent rise in some sectors of the market.
The regeneration of Irish cities has also been a factor in escalating rents as young people prefer the convenience of city living. Traffic congestion and inadequate transport facilities are also factors. Lisney's Joan Fogarty believes that although mortgages are easier to secure at present, people are now accepting that they can no longer afford to buy at present prices and we may be heading towards the European model, where people rent property on a long term basis.
