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14/02: Rents stagnate as supply increases by almost 50% |
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This increase in supply is more than likely a consequence of investors who had put up their properties for sale in 2007 – or who had left their properties vacant up to now – releasing more properties onto the rental market. These properties have pushed up the overall level of supply and contributed to the slowdown in rents, particularly in non-city areas. Commenting on this, Dan O’Brien, Senior Economist with the Economist Intelligence Unit, said: "The most likely explanation for the increase in the supply of properties to rent is that those who invested in property but had not sought a rental income are now doing so."
"Rents have now stopped increasing for the first time since they started to rise in mid-2004, when Ireland opened its labour markets to the new EU members," said Ronan Lyons, Economist, Daft.ie. "The fact that rents have risen steadily since then shows the strong connection between the rental market and immigration. Overall demand still remains strong, particularly in urban areas, and we do not foresee any major weaknesses while immigration remains at current levels."
Rents in the cities
- Dublin: €1,467, up 8.7% on last year
- Cork: €1,160, up 7.7% on last year
- Galway: €1,008, up 6.6% on last year
- Limerick: €914, up 11.2% on last year
- Waterford: €810, up 5.9% on last year
Other findings
- The gap between rents in South Dublin city and North Dublin city – the "Southside premium" – has doubled in just over two years and is now €220.
- Cork city suburbs have seen the biggest increase in rent-a-room income over 2007 - up more than 10% over the past 12 months.
- The stock of properties for rent on Daft increased 90% between January 1st 2007 and January 1st 2008. Half of this increase occurred in the final three months.
- Outside the urban centres rents are now static, while the supply of rental properties has increased dramatically, in some cases trebling.
- Nationwide the average yield for rental property is 3.2%, still below the cost of borrowing.
The full report contains an analysis of the rental market throughout 2007 with an overview of regional trends and a commentary from Dan O’Brien, Senior Economist at the Economist Intelligence Unit. It is available online at www.daft.ie/report
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