As we stated in our update from Q2 2021, the unfortunate reality of the Irish rental market is that the same old story has returned, one of very high demand, grossly inadequate supply, and very high prices. Data from the latest Daft.ie rental report confirms this situation of ‘weak supply in the face of very strong demand, due to underlying economic and demographic growth’.
Nationwide, market rents are now 6.7% higher than a year ago, the highest rate of inflation since early 2019. This rate is in line with the average rate over the last ten years, with rents rising by 6.7% since 2011 (although this hides differences over time, with little increase in rents in 2011/2012 and in 2020, and two double-digit peaks in inflation in mid-2014 and again in mid-2016). In the last report we mentioned that rental inflation in Dublin was, for the first time, lagging other cities across the country as a result of various COVID related factors. This situation has now ended, with the Dublin market firmly back to its ‘normal’ pre-COVID self. We don’t have to spell out what this means.
There is however some good news on the horizon. Data compiled by LIV Consulting, on the pipeline of rental homes in Ireland, points to almost 44,000 rental homes due to come on stream between 2021 and 2026. The LIV figures also point to a further 54,000 rental homes that have been proposed but are, as of now, not yet through the planning system. These would likely be built largely between 2025 and 2027, based on the capacity of the planning and construction systems. But it would mean that roughly 100,000 rental homes would be added in about a decade. This may sound like a lot, but in our view, while an impressive number for a small country, it still lags what the market will require during this timeframe.
Corporate Care’s view:
While we continue to be confident that we can utilise our network of property sources effectively and therefore find
suitable accommodation for the assignees we work with, we must absolutely continue to point out that we expect:
• Continued upwards pressure on pricing.
• Lower number of choices.
• Longer search-times.
• In some cases, a wider search-area to find the right property.
Dublin market data:
PBRH (Purpose Built Rental Homes):
This is an acronym we are going to hear a lot more frequently during the years ahead. Institutional landlords, common in other parts of Europe, have started to enter the Irish market, encouraged by specific codes in relation to the construction of rental homes. Thus, the outlook for new rental homes becoming available in the years ahead is good, as outlined earlier in this report. The less-good news however is that this new supply is skewed both towards the mid-2020s, rather than the next few quarters, and to the Dublin market. In reality every urban area in the country could do with a similar injection of new rental homes.
The rest of Ireland:
According to daft.ie, rents in the second quarter of 2021 were, on average, 6.8% higher than a year previously, the 36th
consecutive quarter where rents are higher than a year ago. It is also worth noting that the rate of increase is gathering
pace once again, it was 5.6% in Q2 2021. Rents are higher, compared to a year ago, in nearly every one of the 54
markets covered in the Daft.ie report. The current range of rental inflation continues to exhibit a greater spread (as
measured by the variation in inflation rates across markets) than at any point in the last 15 years.