While some interesting housing trends have emerged because of the COVID-19 pandemic, the unfortunate reality is that the same old story has returned to Ireland’s rental market. Nationwide, rental inflation picked up from 1.7% in the first quarter of 2021 to 5.6% in the second, this is the highest rate of rental inflation since mid-2019. It is easy to forget that pre-Covid-19, the rental sector had been inching towards stability, albeit at very high rents, with inflation easing from 13.5% in late 2016 to just 4% three years later.
As has been the case throughout the past year or so, that national average hides important regional differences. While Dublin rents are increasing again, year-on-year (they are just 0.5% higher on average than the second quarter of 2020), in other parts of the country rents are increasing and typically at double-digit rates. In Cork, Ireland’s ‘2nd city’, rents are 13% higher than a year ago, while in Connacht-Ulster they are 15% higher.
Corporate Care’s view
Our hope is that August will mark the low point (as has been the case in other years) however the underlying pressure on Ireland’s rental system is intense and the supply shortages are unfortunately worsening. While we remain confident that we can utilise our network of property sources effectively and therefore find suitable accommodation for the assignees we work with, expect continued upwards pressure on pricing, a lower number of choices and perhaps a longer search-time to find the right property. In addition, we are concerned about the following:
• COVID-19 significantly impacted the construction sector with many new projects delayed by many months.
• As sales-prices continue to increase, many property owners (landlords) are opting to exit the rental business.
• Materials prices and building costs have soared making many new housing projects unviable.
• For a number of reasons, Ireland’s population is growing at the fastest rate since the mid-1800s.
Finally, on a more positive note, it appears as if the government is about to take some firm action on the many vacant properties around the country with penalties for those who allow them to remain vacant and incentives for those who refurbish them for rental/accommodation. More on this as it develops.
Dublin market data
The Rest of Ireland
According to daft.ie, rents in the second quarter of 2021 were, on average, 5.6% higher than a year previously, across the country, the strongest year-on-year increase in rents since mid-2019. Rents are higher, compared to a year ago, in 46 of the 54 markets covered in the Daft.ie Report. With rental inflation ranging from -7% in Dublin 2 to +17% in Kerry, the current market exhibits greater spread (as measured by the variation in inflation rates across markets) than at any point in the last 15 years
The average national rent in Q2 rose by 5.6%, marking the 36th consecutive quarter where rents are higher than a year ago. Ireland’s rental sector is estimated to be 50% larger now than fifteen years ago but the availability of homes to rent online is half of what it was then. Finally, while no short-term ‘easing’ measures are likely, the Irish Government is acutely aware of this issue and the potential it has to hamper economic growth, among other things. Their new Housing-For-All programme rolled out this month promises to add 33,000 new homes per year for each of the next 10 years, starting in 2022. We and many others will be watching closely.