Rent more expensive than paying a mortgage
It is now cheaper to pay a mortgage than pay rent in all areas for starter and family homes, new research has found.
The Daft.ie rent report records that rents nationwide rose by 1.5pc in the first quarter of the year and the average is now listed at €1,366. In Dublin, the average price is much higher at €2,002 - an increase of 6.8pc within the year.
The number of homes available to rent across the country is at the lowest ever level since the series began in 2006 - at just 2,700 homes. As a result, with tight supply, listed rents rose again in all 54 markets covered by the report.
Daft.ie also carried out an analysis on whether it was cheaper to rent or buy - using a standard 30-year mortgage, with 85pc loan-to-value and on a rate of 3.5pc variable mortgage on average house prices in each region.
It found for a one-bed apartment or a two-bed and three-bed house, it was cheaper to pay a mortgage than it was to rent in all areas of the country - even allowing for a 2pc increase in interest rates.
In north Co Dublin, for example, a one-bed apartment might cost €618 per month in mortgage repayments - but this area is clocking up average rents of €1,247 for the same type of property.
In Dublin 16, a mortgage on a three-bed home might cost €1,598, but renting the same type of house would cost an average of €1,919.
Similarly, in Cork city a mortgage on a two-bed house would come in at €632 a month, but rent averages of €1,147 are listed.
The phenomenon is not restricted to cities - a mortgage on a three-bed home in Meath is listed as €718, while rent is €1,247; and in Sligo at €384 while rent costs €732.
The report says that the average market rent nationwide has risen by 84pc since bottoming out in late 2011 and, having exceeded its 2008 peak in 2016, is now 32.7pc above the previous high. In Dublin, rents are now an average of 39pc above their previous peak while in Cork and Galway cities, rents are 32pc and 49pc above levels recorded a dozen years ago. Outside the cities, the average rent is 24pc above its previous peak.
Compared to last year, there are double-digit rate rises in Cork, Galway, Limerick and Waterford cities.
The statistics are based on properties advertised on Daft.ie for a given period.
"Low availability of rental properties is clearly a major issue at the moment. With over 1.4 million property searches on Daft each day demand continues to be strong, despite decreasing supply in the current market," said Raychel O'Connell, from Daft.ie.
Commenting on the report, Ronan Lyons, economist at Trinity College Dublin and author of the Daft report, said that the rental market remains "plagued by weak supply at a time of strong demand".
"While the total number of rental homes on the market did improve slightly earlier in 2019, the figures for May have undone all that progress," he said.
"Much of the commentary around new supply for the market is unhelpful, particularly talk of so-called 'cuckoo funds' - what in other countries are termed landlords.
"With the sale market showing signs of greater balance between supply and demand, policymakers must maintain their focus on boosting rental supply.
"A key part of that is developers building, and institutional landlords buying, new apartment blocks."
Pat Davitt, CEO of the Institute of Professional Auctioneers and Valuers, said that although we do need institutional investors, if they continue to receive more favourable tax treatment they will dominate the market.
"One can call them cuckoos or 'swallows' as coined in today's Daft report, either way they will quickly find their nest if it's made for them by the State, that is their nature," he added.
Reacting to the figures, the Simon Communities said it is clear the rental market is not capable of delivering the housing now needed, given the scale of the current crisis.