Based on a new rental report by Daft.ie, Ireland market rents in the second quarter of 2022 were an average of 12.6% higher than the same period a year earlier, as availability of rental homes reached an all-time low.
The average market rent nationwide between April and June was €1,618 per month, up 3.3% on the first three months of the year and more than double the low of €765 per month seen in late 2011.
The annual inflation rate of 12.6% nationally is the highest recorded in the Daft.ie Report since its launch in 2006, surpassing the previous peak of 11.8% in late 2016. The rate of inflation in Dublin, at 12.7% was above the national average for the first time 2018, while in Cork city, the annual change in market rents was 11.8%. The rate of inflation in the three other principal cities - Galway, Limerick and Waterford - was higher, ranging from 16.4% in Galway to 17.7% in Limerick. Outside the cities, the average annual increase in market rents was 12%.
As has been consistently the case over much of the past decade, the increase in market rents around the country is driven a further tightening in rental availability. However, the scarcity of rental homes has been unprecedented over the past year. Nationwide, there were just 716 homes available to rent on August 1st, down from almost 2,500 a year ago and another new all-time low in a series that extends back to 2006. Compared to 2009, rental availability has fallen by 97% nationwide.
The report includes an analysis of 75 multi-unit rental developments, which are estimated to have added almost 1,000 new rental homes in the last nine months, or roughly 25 new homes per week. Of the 7,500 homes in these developments, almost 95% are estimated to be occupied, based on publicly available information. Also in the report is an analysis of figures provided by Cortland Consult on the pipeline of new rental homes. Over the past year, the pipeline has increased by approximately 23,000, representing an increase of 13,000 under construction and 28,000 for which a planning application has been submitted - as well as a decrease of 17,500 at pre-planning stage. The stock of rental homes for which planning has been granted but yet to start construction remains steady at 43,000.
Commenting on the report, Ronan Lyons, Associate Professor of Economics at Trinity College Dublin and author of the Daft Report said, "A resurgent economy over the last year has accentuated the chronic shortage of rental housing in Ireland. While the professional rental sector has added over 7,000 new rental homes in the last five years, this is small relative to the fall of 30,000 in rental listings each year in the traditional rental sector in the same period or the fall of 100,000 listings per year since 2012. The shortage of rental accommodation translates directly into higher market rents and this can only be addressed by significantly increased supply. While there are almost 115,000 proposed rental homes in the pipeline, these are concentrated in the Dublin area. Further, while nearly 23,000 are under construction, the remainder are earlier in the process and the growth of legal challenges to new developments presents a threat to addressing the rental scarcity."
Average rents, and year-on-year change, 2022 Q2