A new study of the rental housing market predicts that rents will rise by between 22% and 26% over the next two-and-a-half years.
The research has been carried out by the real estate company Savills and is based on CSO data.
The researchers say they have found a link between the percentage of vacant rental properties and the rate of rent increases.
Dr John McCartney, Savills’ Director of Research, said:
“There’s a very strong relationship between movements in the vacancy rate and movements in rental growth.
“Over the last 31 quarters, 95% of all the ups and downs in the rental growth index have been explained by movements in the vacancy rate.”
Dr McCartney said that house price inflation, sluggish wage growth, weakened household balance sheets and tight mortgage lending has driven people who would otherwise have been owner-occupiers into the rented market.
The report also found that supply of rental properties had actually increased in the past five years, contrary to some assumptions.
However that growth had been completely outpaced by the rise in demand that had come due to fewer people being able to buy properties, as well as the increased use of private rental properties for social housing.
Savills said there were more than 100,000 additional people in rented accommodation now than in early 2011, with more than 18% of the population nationwide now renting.
In Dublin the report found a 48.6% increase in the number of renters since 2011, with nearly one in four people (or 24.5%) living in rented accommodation in the capital compared to 27% in London.
This has left the vacancy rate at around 1.5% nationally, which in turn has fuelled the sharp rise in rental prices.
The report also suggested that a 300% increase in vacant units was needed before rents would stabilise.