Rental market cools down as more properties are available for lettings
THE recent rise in rents appears to be easing, possibly because owners and builders of apartments are having to let them out because they cannot sell them.
So say economists at AIB Global Treasury in their latest bulletin on the housing market.
Analysis of the Daft.ie property website shows that rents have slowed noticeably in recent months.
They were 6.6pc higher in October than the same month last year, which is almost half the rate of increase recorded earlier in the year.
AIB say the earlier 12pc growth is was probably due to a shortage of rented accommodation, as new apartments remained unsold and demand increased.
They also note reports that some investors sold their properties to occupiers, last year and early this year, to take advantage of high prices, thereby adding to the shortage of rental accommodation.
Now, however, the Daft website shows a record number of properties available for rent.
"Some owners of vacant properties that have proved difficult to sell are likely to have turned to the rental market as a short-term measure, rather than leaving the property unoccupied with no return on the cost," AIB say.
They quote "significant evidence" that some developers are placing new apartments on the rental market rather than cutting prices to help them sell.
This week it was reported that the price of apartments in a north Co Dublin development had been cut by up to 20pc, but most developers are still reluctant to do this.
"If the trend towards renting continues, we can expect a further slowdown in rental growth," the analysts say.
"However, if house prices continue to fall, this will help shift the balance between buying and renting back towards the purchase option."
The report says that figures for house completions are finally beginning to reflect the indicators such as guarantee registrations which have been in decline for some time.
Completions showed no growth in the first half of the year, but were 20pc down in the July-October period.
Housing starts were down by almost a third in the first ten months of the year and registrations in November were at half the level of the same month last year, marking out the slowing market.
- Brendan Keenan
