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Rental trends signal housing supply is meeting demand in some sectors

Fears are raised over potential oversupply

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New supply: The Herbert Hill apartments in Dundrum, Dublin, developed by Glenveagh and then sold to an investment fund

New supply: The Herbert Hill apartments in Dundrum, Dublin, developed by Glenveagh and then sold to an investment fund

New supply: The Herbert Hill apartments in Dundrum, Dublin, developed by Glenveagh and then sold to an investment fund

The latest Daft rental figures provide further evidence that supply is close to meeting demand in some segments of the housing market.

Not alone are residential rents falling outside key cities, but the rate of increase even in Dublin is slowing sharply.

While Dublin rents rose 3.5pc over the 12 months, this was the slowest rate of increase since 2008 and well down on the peak growth rate of 19pc. Even more noteworthy is that they were practically unchanged in the last quarter when they rose by only 0.4pc.

Equally interesting is that rents were below the annual Dublin average in a number of areas, most notably for two-bedroom units in Dublin 1, 2, 4, 6 and 10.

Dr John McCartney, of estate agents Savills, believes that this slowdown in both rental and price inflation last year signals that supply is coming close to demand in many sectors.

According to Fine Gael, 25,000 new homes were "being built" in 2019 and almost 20,000 will be built this year.

Dr McCartney is concerned that economists who argue the need to increase supply to 35,000 new homes a year are in danger of encouraging developers to over supply the market. He points out that figures for new dwelling completions fail to include completion of ghost estate units, refurbishment of derelict units and student beds.

"There were 5,254 student beds under construction in Q3 2019, most of which are in Dublin," he added.

Already there are anecdotal reports that some housing developments in the Dublin commuter belt have vacant houses because they are slow to sell. The 'Business Post' last week reported that the number of new developments selling new homes into the Dublin market, including Kildare, Meath and Wicklow, had risen to 140 - the highest level since the recovery.

There have also been anecdotal reports that builders are slowing down the rate at which they are building houses because of concerns that they will be left with vacant stock. But in addition to the 140 developments which are selling to home buyers, there are the PRS projects which developers are building for sale to investment funds or approved housing bodies backed by the Government's housing agency.

Some of these projects are also helping to meet demand for social housing as developers are doing deals with enhanced leases to a Government-backed lessor for social housing.

An example of this was Glenveagh's Herbert Hill development of about 90 units in Dundrum, Co Dublin, which was then sold to a fund.

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