Rents rising nationwide as shortage of accommodation falls short of demand

Rents are on the rise and not just in Dublin, according to Daft.ie's latest report on the rental sector which shows year-on-year increases in all cities apart from Waterford in the last quarter of 2013.

The increase in the average rent nationwide rose to 7.1 per cent in the final quarter of 2013, compared to a 2.2 per cent rise a year previously, according to the quarterly Daft.ie Rental Report.

The average advertised rent, which the property website bases on a sample of over 10,000 property lettings nationwide, stands at €865, compared to €790 two years ago.

The increase in rents is mainly being driven by inflation in Dublin where rents rose by over 11 per cent in the past year: they are now almost 18 per cent higher than at their lowest point in mid-2011.

Rents in Dublin are now effectively at the same level as early 2006, when the average Dublin rent stood at €1,250. However, they are still 15 per cent below peak prices witnessed in mid-2007.

Rents in most other cities have also risen in the past year: they are up by over 4 per cent in Cork and Galway while Limerick rents have risen by 3.6 per cent.

The exception is Waterford city, where rents continue to fall at 0.6 per cent year-on-year.

Ronan Lyons, economist at Trinity College Dublin and the author of the Daft report said rents in Dublin were being driven by an "acute shortage" of rental accommodation.

He pointed out that, in February 2009, a tenant looking to rent in Dublin would have had 6,700 properties to choose from. Now there are just 1,500 properties on the market, a 78 per cent drop.

Less than healthy
Mr Lyons said availability has "never been as low as it is now" adding the number of available properties was now "far below a healthy level".

“A healthy level would be around 3,000 units available at any one time, so we’re now well below the supply needed for stable rents”.

Mr Lyons said the onus was on the Government to encourage “significant amounts of new construction” in the capital to address the shortage.