'Rental squeeze' leaves more people living in each home as pressure grows
THE effects of the rental squeeze are laid bare in a new report showing that a record number of people are now tenants, with more squeezing into each housing unit than ever before.
The latest report from Savills Ireland shows how the housing crisis is having an impact on our everyday lives, with a quarter of people in Dublin now renting their homes.
There are now almost three people in each rented home, which includes apartments. This lays bare the plight of the “trapped generation” – growing families who have been unable to trade up amid the after-effects of the housing crash.
It also demonstrates how increasing numbers of young professionals are having to share rented accommodation.
The report says that 18.9pc of Ireland’s population are now in the private rented sector – the highest proportion since records began – rising to 24.3pc in Dublin.
Savills notes an increase in the size of rental households, which is also now at its largest since quarterly records began.
The average household size has been on an upward trend since the start of 2016, and is now up to 2.8 people.
Dr John McCartney, director of research at Savills Ireland and author of the report, said: “A reasonable interpretation is that renters have begun to form larger households because of the absolute scarcity of available properties.”
The vacancy rate in the private rented sector remains tiny, at just 1.31pc across Ireland.
The clamour for homes means Savills suggests that rents will keep rising until the vacancy rate reaches its ‘equilibrium’ level of 5.6pc.
However, this will not happen within the foreseeable future and so the outlook is for further rent inflation.
Savills is forecasting 5pc-6pc annual rent inflation until the end of 2019 in Dublin.
Outside of rent pressure zones where there are controls on inflation, this could rise to as much as 7.2pc per year.
There are now 895,600 people living in rented accommodation nationwide, which is up 39,500 in a year.
“The continued expansion of Ireland’s private rented sector should not come as a surprise,” said Dr McCartney.
“Property prices continue to advance faster than average earnings, creating an affordability challenge to home-ownership which is driving people into the rented sector.”
Savills also reports that cash investors are now crowding out mortgage-financed buy-to-let landlords. An estimated 199,466 units are currently owned outright by investors – 61.1pc of total private rented stock. The remainder are held by debt-financed investors.
This number has declined by 23,192 since the middle of 2012.
“As we predicted last year, there has been an influx of cash investors who are attracted by capital appreciation, low void risk, and strong rents,” Dr McCartney added.