Capital’s rental crisis to get worse as office staff finally return

“This rental story is as predictable as the day is long. We had a huge rental crisis. We didn’t have enough stock and then we had this little false dawn when Covid hit,” she said.

Referring to those who had returned abroad or to rural locations during the pandemic, Ms Finnegan said: “Everyone went home and that took the heat out of the market, so this is just the beginning of it.

“We see the economy reopening, and the level of stock that Daft are saying they have on their books now versus what they would have said 10 years ago was really inevitable, so there are going to be huge issues ahead.

“It’s going to get worse, not better, because right now nothing is being done to improve the situation.”

For every investor buying an investment property, there are at least two leaving the marketplace at a time of growing population and at great speed, Ms Finnegan added.

They are not being replaced by the purpose-built, long-term residential rental accommodation sector “because that is still largely in its infancy and it’s not really delivering a lot of new empty rental units we need to be delivering, which is somewhere in the area of 6,000 units a year”.

Instead, “we are losing that a year out of the market, so we have been having an emerging crisis. To be honest, it sort of shocked me in lots of ways that this wasn’t getting as much focus as I felt it deserved”.

Ms Finnegan warned that the crisis was going to present the biggest challenge yet to reopening the economy following the pandemic.

“I think we are going to see a huge fallout in terms of people’s willingness to come back to the office when the economy reopens because they are going to find it hard to get accommodation,” she said.

“In terms of our national competitiveness and attractiveness for inward investment, it’s very hard to say to companies, ‘Come and set up in Ireland’, if we simply don’t have the accommodation for their staff.

“People will be saying, ‘I want to come back to the office, but I can’t find anywhere to live’. This is going to be the emerging topic in the property market for the next six months.”

On the knock-on affect on a generation of third-level students, she said: “From September, when the colleges reopen and when many students come back on campus, I think some will have their needs satisfied with student accommodation, but not many, so they will put pressure on the private rental sector.”

Owen Reilly, an estate agent for Dublin’s ‘Silicon Docks’, said renters will feel the “crisis” point early next year. “You’ll see in our report, which our company released six months ago when rents had fallen and people had left the city, I said we were likely to see a rental crisis in the coming months.

“When Covid came, offices shut down, people went home to work remotely and a large cohort of non-Irish professionals decided to leave Dublin and be with their families. Because of that reduced demand and increased supply, the short-term lettings market collapsed and we had a temporary dip. But now I think this respite for tenants is going to be short-lived.

“Remember during that time landlords continued to leave the market in large numbers. And couple that with the shutdown of construction sites and with colleges reopening and companies starting to open from September and October.

“So, unfortunately, it’s going to get worse for tenants before it gets better.”

Mr Reilly said there was a supply-demand mismatch coming in the next couple of months that will be marked with a huge pick-up in demand.

“There is a lot less rental stock in the market because landlords have exited and the most prolific buyers are owner-occupiers,” he said.

“So when most of our sellers are landlords and most of our buyers are owner-occupiers, it’s squeezing the number of rental units available all the time and it’s going to hit crisis point at some stage next year.

“In the meantime, more landlords are going to exit the market and, month-on-month with the return to the office, we will start to feel the implications of shutting down the construction sector next year.

“It’s likely output won’t catch up until later in 2022 or even 2023.”

On the reopening of the economy and the return of office workers, Mr Reilly said: “I think the problems will start in September or October, but I still think the real crunch will be seen next year in the first quarter because of the gradual return to the office.”

For people returning or moving for the first time to the city, “it’s going to be difficult, but, depending on what your budget is, you will find accommodation. I think it’s going to be particularly tough at the lower end of the market”.

Danny McCoy, the spokesperson for the Irish Business and Employers Confederation (IBEC), said: “It’s not simply going to be the case where employers get the office open and say to employees, ‘OK, everyone come back now’. All the other parts of society need to be in place too.

“This problem has been building for years now with population increases and growth in business and the infrastructure hasn’t been put in place for what’s required, so there is a danger there will be coordination problems over the winter months.”

It comes as the number of units available collapsed to its lowest level on record, according to a report released recently by property site Daft.ie.

It shows only 2,455 rental homes were available across the country on August 1, the lowest since records began in 2006.

Following its publication, report author and associate professor in economics at Trinity College Dublin, Dr Ronan Lyons, said: “The underlying pressure on Ireland’s rental system is intense and the supply shortages are chronic and worsening.”

He said the lack of supply was a familiar problem for cities, but the issue had now been “exported” to the rest of the country during the pandemic.

Dr Lyons also warned that “next to no” new rental accommodation has been built in Ireland over the past 15 years, despite a substantial increase in the number of people renting.

Following the pandemic, it is predicted 25,000 fewer homes than needed will be built by 2023.

The Central Bank of Ireland warned last month: “Persistent imbalances between housing supply and demand mean that affordability pressures across rents and house prices continue to rise.”