Tight supply drives Dublin rents to €1,041 monthly average

Rents in Dublin are rising at the fastest rate since the second half of 2007, new statistics from the Economic and Social Research Institute (ESRI) show.

According to a rent index compiled by the Private Residential Tenancies Board (PRTB) and the ESRI, which is based on actual rents of more than 273,000 tenancies registered with the PRTB and which commenced in Q3 2007, rents in Dublin grew by 6.4 per cent in the 12 months to September, driven by a tightening in supply.

However, a “two-speed” market is still at play, with rents outside the capital falling by 0.2 per cent over the same period. However, a modest price increase in the third quarter of this year for rents outside of Dublin, might be a sign that this trend is being reversed.

On a quarterly basis, Dublin rents grew by 2.5 per cent in the third quarter of the year when compared with Q2, with rents for houses jumping by 2.9 per cent, and apartments by 2 per cent.

Modern standards
In Dublin, the average monthly rent stood at €1,041 in the third quarter, up from €1,105 in the second quarter, and €978 a year ago. Houses attract a slightly higher rent at €1,157, up by 5.7 per cent on a year ago, while apartments have also seen a 6 per cent increase, up to €1,042.

David Duffy, a senior research officer with the ESRI, said that a tight supply of property for rent is “contributing to the price increases”.

While the construction of new developments remains limited, Mr Duffy said that another factor is the removal of bedsit accommodation from the market. So-called pre-63 properties must now be fitted out to modern standards, which has led to a glut of them coming onto the market for sale.

At the same time, as the 2011 Census showed, more people are renting.

Looking outside the capital, Anne Marie Caulfield, director of the PRTB, referred to a “more mixed picture”. While there was a decline in the 12 months to September 2013 of 0.2 per cent, the third quarter showed a 1.4 per cent rise in rents.

Urban centres
"This may indicate that the upward trend in Dublin is now also beginning in the rental market outside the capital, especially for houses," she said.

Mr Duffy noted that the increase outside of Dublin appears to be driven by other urban centres, and “we’ll have to wait and see as to whether it’s sustained or not”.

The average rent outside Dublin in Q3 stood at €620, up from €612 in Q2 but down from €622 a year ago. For houses, the figure was €622 in Q3, up by 2.3 per cent on the previous quarter, while for apartments, the figure was €624, down by 0.5 per cent on Q2.