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News : Property Last Updated: May 12, 2014 - 9:15 AM


Irish House Rents 2014: Average rent nationwide up 9% in 12 months
By Michael Hennigan, Finfacts founder and editor
May 12, 2014 - 8:00 AM

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Irish House Rents 2014: The average rent nationwide is now 9% higher than it was at the same stage last year according to the latest quarterly Rental Report by Daft.ie.  Rents rose in every county outside Connacht & Ulster, with the biggest annual increase of 14% occurring in Dublin city centre.  The average rent nationwide is now €888, up €69 from the trough in 2011.
 
Rents rose in all city centres, with Cork & Galway cities experiencing a 6% rise, Limerick 5% and Waterford 1%.  Rents in Dublin’s neighbouring counties of Wicklow and Kildare also witnessed a significant increase of 9%.
 
Outside of the cities, rents rose by an average of 4%, whilst the number of properties available for rent is now under 4,000 – down from 11,000 two years ago.
 
Commenting on the report, Ronan Lyons, economist at TCD and author of the Daft Report, said: “This latest Daft.ie Report shows that the housing crisis in Dublin is getting worse. The solution is not capping rents, which will limit the supply of new homes, but rather addressing the underlying problems, in particular streamlining the cost of land and of regulation.”

Year-on-year change in rents – major cities, Q1 2014

Dublin: €1,289, up 14.0%
Cork: €848, up 6.2%
Galway: €828, up 5.6%
Limerick: €672, up 5.4%
Waterford: €601, up 1.4% 

Ronan Lyons added in his quarterly report [pdf]:

With local and European elections just a couple of weeks away, a number of candidates - particularly in the Dublin constituency - have been talking about rent control as a necessary remedy for the ills of rising rents. However, while the desire to simply make illegal what you don't like is understandable, it mistakes the symptom for the underlying disease.

On the one hand, tenants already have reasonable security of tenure. Since the Residential Tenancies Act 2004, once a 6-month probationary period has been passed, tenants have security of tenure in four-year cycles, something that is known as a "Part 4 Tenancy". (To ensure this is the case, tenants who have signed one-year leases need to notify their landlord about their intention to stay - more here.) There are a certain number of conditions under which a landlord can terminate a tenancy, but getting higher-paying tenants is not one of these.

On the other hand, rising rents are caused by a lack of accommodation in urban centres and reducing rents will discourage the provision of new accommodation, thereby making the problem worse. What we have seen in both sales and rental markets is reasonably robust demand for accommodation in Dublin and other cities, which has pushed up both rents and prices. These should be acting as a signal to bring about new supply - so why has significant new building not started in Ireland's cities?

Whether construction of new homes takes place depends on whether revenues exceed costs. Revenues come from rents and house prices, which both appear to be at the cusp of affordability given incomes in Ireland. Therefore, if rents and prices are high enough, the solution is about reducing costs in construction - not about capping rents and thus further discouraging the very construction that would alleviate the accommodation crisis.

The cost base in construction includes capital, labour, land and regulation, as well as materials, whose prices are typically set on world markets. What is needed now is for the Government to go through each element in the cost base and develop actions to lower costs. It may surprise some readers to learn that the cost of building a house is 3.3% higher now than in 2007."

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