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Rents ‘back to pre-COVID state’ as rural rates rise

Annual inflation in the rental market hit its highest level since 2019 in the third quarter of this year, according to the latest report from property website Daft.ie.

It said that rents across the country rose by 2.6% during the three-month period, giving an annual increase of 6.7%.

The three-month increase was above 2% for the third quarter in a row. The average monthly rent in the quarter was €1,516.

Weak supply

The report’s author, Trinity College economist Ronan Lyons, said that the figures confirmed a return to the pre-COVID situation of weak supply in the face of very strong demand, due to underlying economic and demographic growth.

On 1 November, there were just 1,460 homes available to rent nationwide – down 65% compared with a year earlier, and the lowest figure since the report began in 2006.

The Daft.ie figures show that rents outside Dublin have risen by significantly more than rents in the capital since the pandemic began.

Lyons points out, however, that Dublin rents are still 80% more expensive than non-city rents – a higher premium than in 2006 or 2007. Rents in Dublin were also 2.5% higher than a year earlier in the third quarter – the highest rate of inflation since the start of the pandemic.

More homes in pipeline

In a commentary on the figures, the economist argued that proposed solutions, such as rent controls, would do nothing to address the reason why prices are rising: “the lack of rental accommodation”.

Lyons added, however, that there might be “better times” ahead for the rental market, referring to figures from LIV Consulting that point to almost 44,000 rental homes coming on stream between 2021 and 2026.

According to the economist, the figures also indicate that another 54,000 rental homes have been proposed, but are not yet through the planning system.