A report by internet giant Daft.ie has found that rental prices are 13.7pc higher than in the same period last year. The main contributor remains to be supply and demand; there simply are not enough properties to satisfy the rental demand. This means landlords outside the Rental Pressure Zones (RPZ) have carte blanche to charge what they feel they can get on their property.
Where is Affected?
Although increases have differed across counties, the rent increases have affected the country.
Last year (January 2022 – December 2022), the inflation rate in Dublin was just above 12%; Cork city was nearly 15% while Limerick city was nearly 19%, and the highest was Waterford city which was a staggering 20.2%. The average annual increase in market rent in rural areas was 13.6%. One county, Leitrim, saw an increase of over 21%.
Across the entire country, just over 1,000 homes were available to rent on February 1, down over 20% on the same date a year previous and roughly one-quarter of the average level of availability during 2015-2019.
How much is the rent now?
Each county has been subject to its level of rental inflation.
The average rental cost in Dublin as of February 13th is €2,300 and in Cork €1,700.
Report author and associate professor of Economics at Trinity College Dublin, Ronan Lyons, said it shows the chronic shortage of rental housing.
“The extraordinary collapse in availability over the past two years has brought about record increases in open market rents. A new rental supply is the only real solution to a shortage of rental homes.”
“Among the worst affected cohorts are younger adults, with the median adult age of leaving the parental home having grown almost 50% in the last decade,” he warned.
“Policymakers must have a clear plan on how their housing needs will be met, a plan that includes tens of thousands of new rental homes being delivered this decade in all significant towns and cities.
Is Rental inflation expected to slow down?
It’s currently projected that the Irish housing market will increase in 2023 but start stabilising with a growth of only 2%. This does mean that property prices will likely increase by the same amount.
Growth in property prices will invariably see another increase in rental inflations. Supplementing that growth will be the supply and demand element; if the housing shortage worsens, the demand for rental properties will likely increase, which will be a driving force behind the rental increase.
What does the rent increase mean for landlords?
With the housing market in its current state, there has never been a better time to rent a property; with landlords leaving the sector in 2022, the Government will likely introduce new tax breaks in 2023 to entice existing and historic landlords to remain in the industry.
Coupled with the rent increase, it remains a very profitable endeavour to own Irish property to rent out to tenants.
If you require any advice or assistance on renting out a property or property management, then the experienced team at KPM can help.
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