Rent costs up 2pc in first rise since 2007
THE average cost of renting a home has risen by more than 2pc in the last year – the first rise since 2007.
But a new report says that the increase is only occurring in bigger cities including Dublin, Cork and Galway, and that there is a danger of a housing shortage in these areas.
The Daft.ie rental report, published today, says the biggest rise is in the capital, where rents have increased by 6pc. At the other end of the scale, the sharpest fall has been in Carlow, where rents dropped by 4.6pc.
The average national rent rose 2.2pc during 2012, and currently stands at €808. This compares with €790 in late 2011.
Economist with Daft.ie, Ronan Lyons, said the year-on-year increase was being driven by Ireland's largest cities, which were the biggest drivers of employment.
Rents in Dublin, Cork and Galway experienced their second consecutive year of growth, with annual rises of 4.9pc, 1.8pc and 2.3pc respectively.
"While much of the country is still dealing with a glut of properties from the bubble, it is increasingly evident that there is a shortage of rental properties on the market in urban areas, and in particular Dublin," he said.
"Ireland's surplus properties are overwhelmingly outside its main cities. Those starting their careers are now looking to cities to provide them with employment. It is Dublin, Cork and Galway that appear attractive places to live.
"The evidence from the rental market is that Dublin, in particular, is facing if anything a shortage of places to live.
"This may be alleviated temporarily by stock currently held in NAMA coming on to the market, but ultimately Ireland's major cities will need to prevent future inflation in rents by planning for new construction."
The warning comes as figures released last week showed the number of new homes being built has plummeted to its lowest level since records began more than 40 years ago.
The vast majority of the 8,488 homes built last year were one-off stand-alone houses, with just 507 built in Dublin.
The Daft.ie report also says:
• There are just under 12,000 properties available to rent, the lowest figure since 2008.
• The highest average rent for a three-bed family home is found in Dublin 4, which includes Ballsbridge, Donnybrook and Sandymount, where it costs €2,214 per month.
• The lowest is in Ulster, where the monthly cost is €559.
• While average rents have increased in Dublin, Cork and Galway, they have fallen in Waterford city (down 2.8pc to €597) and Limerick city (down 1.1pc to €638).
• Although rents have increased in Dublin, they are still down 24pc on 2007 levels. The fall from the peak has been smallest in Galway, down 19pc.
The report is based on properties advertised on Daft.ie.
The average sampling size is 10,000.