Rental prices are predicted to rise sharply as the recent supply of new dwellings that helped alleviate inflation begins to dwindle. Property website Daft.ie suggests the average wage earner will be profoundly impacted by this trend.
In the initial quarter of 2024, private residential rentals witnessed an average 0.6 per cent growth, the most modest increase observed over the past three years. However, Daft foresees the resources of new property, which momentarily curbed the rate of growth, will soon exhaust, resulting in a steeper increase in rental prices this year.
The report documents the addition of around 10,000 new rental properties through more than 125 specialised rental projects that have launched since 2016. As of the 1st of October last year, almost 1,500 properties were listed for rent in Dublin, compared to a mere 800 listings the preceding year on the same day.
Following this, the abundance of property available for rent in Dublin has dwindled instead of growing – with a portion of that decline attributed to seasonal trends. On the 1st of May, listings had a marginal increase of 4 per cent from the previous year with just over 1,200 homes.
Ronan Lyons, associate economics professor at Trinity College Dublin and the report’s author, highlighted the notable influx of rental properties had momentarily reduced the inflation rate as of earlier this year.
Lyons notes: “The recent increase in availability appears to have ceased, admittedly for the time being. This insinuates that the likely direction for rental prices in the free market would be upwards rather than downwards.
The construction of new rentals in Dublin, according to Lyons, had a significantly mitigating effect on inflation for the past year and a half. However, he observed the stalling construction, suggesting an upward price pressure which could put strain on individuals with average wages.
Lyons posits that it’s crucial for decision-makers aiming to boost the density of rental properties in the years to follow to gain a comprehensive understanding of the rental sector’s dynamics.
Daft’s report unveiled that the city with the highest demand, Dublin, saw the mean monthly rent reach €2,395 in the quarter leading up to March’s end, reflecting a 2.5 per cent uptick compared to similar period in 2023.
During the same period, the price to rent a home in Cork increased by 8 per cent, amounting to €1,870 per month. In Limerick, the rentals experienced a steep rise of 17.5 per cent reaching €1,933. In Galway, the hike was more modest at 5 per cent, costing €1,861. Waterford saw an increase of nearly 7 per cent in the rent amounting to €1,495, while the remaining parts of the Republic observed a 6.8 per cent hike settling at €1,467.
The report highlighted that the increase in national rent was a departure from two years back when it had peaked at 14 per cent, mostly due to escalation in Dublin. Nevertheless, the rate of growth in rental price in other regions also slackened.
According to the property agent, the number of homes available for rent on the first day of May remained stable compared to last year at 2,000 units. This was less than half the average figure of almost 4,400 homes available between 2015 and 2019, as mentioned in the report.