Irish Residential Rental Market
According to Ryan Lyons, the author of Daft Quarterly Rental Market Report for Irish Residential Market, the crucial element to understand the rental market in Ireland today is “quantity”. The author believes that the underlying problem is not the problem of prices but the quantity of properties available on the rental market. This is the reason why well intentioned efforts to put caps on rental prices and extending rent increase periods will not sort out current property crises. There are simply not enough properties on the market to meet the demand.
As we might all ask ourselves “what about the ghost estates and all the empty properties?” The simple answer is there is less ghost properties than we believe there is. As per the report “But of the 180,000 units identified in ghost estates, more than half had never even been started – they were just planning permissions on a page – while of the remainder, more than half were occupied. There were roughly 35,000 empty ghost estate units, and almost none in the urban centres.”
So why is there no new properties being build? It seems that the costs of construction are simply too high in comparision to average income (rents that are achievable). “For example, the best figures we have available suggest that to build a two-bedroom apartment and cover costs, excluding land, a rent of roughly €1,400 a month is needed to break even. However, there are very few markets in the country – three out of the 54 analysed in this report, to be precise, and all in central Dublin – where average rents for two-bedroom apartments are at or above 1,400 a month. The cost of construction would need to be roughly half what it is currently in order for it to be viable for either profit or social developers to consider building new homes at scale.”
The question now is why are the prices so high?
Now let’s look at some figures quoted by the report:
Rent Average Nationwide: €964
Average Rent Galway City: €868
Average Rent Dublin City Centre: €1,408
1 bed apartment |
2 bed house |
3 bed house |
4 bed house |
5 bed house |
||||||
Galway City |
8.50% |
0.10% |
7.90% |
-0.30% |
5.80% |
-0.50% |
3.50% |
-0.30% |
2.90% |
-0.50% |
daft.ie Rental Report: Q3 2015 – An infographic by the team at daft.ie