Irish rents have soared to a new high in 2017, as the supply of available property has decreased.
Research by ECA last year found that the subdued global economic growth had helped to drive up rental rates in Ireland, as expats and companies both flocked to the country, which has been enjoying faster-than-average economic growth. With limited stock levels failing to match growing demand, though, rents have continued to climb.
In 2016, meanwhile, Ireland was ranked as the number one destination in Europe for buy-to-let investors seeking rental income. Ireland’s jump from 10th to pole position in the research by World First was fuelled by an average yield of 6.54 per cent, up from 5.34 per cent earlier in the year.
A new report by Daft.ie highlights the extent to which rents have soared: market rents in Dublin are now 66 per cent higher than at their lowest point over the last five years, while outside Dublin, rents have risen 41 per cent.
Authorities have responded to the market’s rising rents by introducing Rent Pressure Zones. To be designated a Rent Pressure Zone for three years, rents in an area must increase by 7 per cent or more annually for the majority of the last 18 months. Once a Rent Pressure Zone, rents can only increase by 4 per cent a year.
The principal aim of RPZ’s is to protect sitting tenants from significant rent increases. Daft.ie, though, notes that if its figures were used to calculate Rent Pressure Zones, rather than the government’s official data, 47 of the 54 markets covered in the site’s report would currently be RPZ’s.
“In preparing this Daft.ie Rental Report, we surveyed over 4,000 tenants, asking them details about the path of rents they have paid in recent years. What we were interested in was examining the extent to which landlords have passed on rent increases faced by movers to sitting tenants. In other words, have “sitting rents” followed the same trend as “market rents”?” explains the report.
“Since 2013, market rents nationally have risen by just over 50 per cent,” it concludes. “However, sitting rents have increased by just 27 per cent. In other words, those who have stayed in the same lease have enjoyed a discount relative to market rents, with rents increasing by just half the increase seen on the market.”
“The message from the rental market to policymakers is the same as it has been for over five years now: more supply is needed.”Google+