The figures in this latest Daft.ie Rental Report make disturbing reading for most, including both those renting and in charge of Ireland’s housing system.
The average rent nationwide rose by almost 4% in the third quarter, equalling the largest three-month increase seen in the second quarter of the year. Combined with other recent increases, it means that the annual rate of rental inflation in Ireland is now 11.7%, the highest recorded by the Daft.ie Report since its series start in 2002.
For much of the past four-to-five years of rent increases, the story has been about where has been driving the national increase in rents.
Particularly in 2013 and 2014, it was Dublin that was responsible for pulling up the national average rate of rental inflation: in mid-2014, rents were 15% higher than a year previously. By late 2015, it was outside Dublin – in particular the other urban markets and the commuter counties around Dublin that were driving the national increases.
Now, however, there is little to choose between Dublin and other markets.
The rate of inflation in Dublin rents has increase from 8.2% in late 2014 to 12.1% between July and September.
Outside Dublin, the average rate of inflation is 10.9% and is only significantly below this in Connacht-Ulster. And even there, Cavan is an exception.
A more detailed analysis points to the same conclusion: rents are rising at double-digit rates in 37 of the 54 markets analysed in the Daft.ie Report, up from just 17 markets as recently as late 2015.
Ronan Lyons, Trinity College economist and author of the Daft.ie report, says all of this is having a very negative effect on Irish society:
“This is having a disastrous effect on social cohesion as well as on Irish competitiveness.
“The graph accompanying this commentary shows the average rent for a three-bedroom home in Dublin 8 over the last ten years.
“The tail end of the Celtic Tiger can be seen in the increase from below €1,450 per month to almost €1,650 between mid-2006 and late 2007.
“After that, though, rents fell to less than €1,050 in late 2010 and early 2011.
“They did not increase much during 2011 and 2012 and by late 2012 were still less than €1,150. Since then, however, average rents for a three-bedroom home in Dublin 8 have risen dramatically and now stand at €1,800 a month, 10% higher than the previous Celtic Tiger peak.”
The publication of the report has led to new calls for the cost of building to be reduced in order to deal with the worsening crisis.
Tom Parlon of the Construction Industry Federation says building costs are adding to the problem:
“The powers that be need to sit down and look at what couples can afford to borrow within the central bank regulations.
“And they need to look at the costs and where those costs are coming from, and if whether it be the VAT again or the very, very substantial levies that are there.
“I believe they need to be addressed if we are to reduce the costs of construction of houses.”
The full report can be read here https://www.daft.ie/report