Wednesday 11 December 2019

Revealed: Areas with highest rental hikes as country braced for 'ten more years of rent misery'

Rents have hit a new record high, piling pressure on tenants
Rents have hit a new record high, piling pressure on tenants
(stock photo)
Charlie Weston

Charlie Weston

Rents have hit a new record high for each of 14 consecutive quarters, piling more pressure on tenants.

The average rental cost across the country has now hit €1,400 a month, which is €660 higher than the low seen at the end of 2011. They are being pushed up to unprecedented levels by tight supply.

It now costs €70 more to rent than it did last year, a rise of 5.2pc. Over a year, the additional cost works out at €840.

Rents have risen so much that they are now €373 a month higher than the previous peak they hit during the property bubble in 2008, according to the latest rental report.

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Dublin rents are up almost 4pc in the past year, with the average monthly cost in the capital now €2,044. This is €76 a month more expensive than the same period last year. This means it is costing a Dublin family €912 more a year for accommodation.

Author of the report economist Ronan Lyons warned that the market could face another 10 years of high rents if the Government continues to "settle" for a system that depends on the likes of cuckoo funds to prop up the rental market.

"Otherwise, the market may not suffer another 10 years of rising rents, but it will likely suffer another 10 years of high rents. And for a country dependent on its attractiveness to businesses that could set up somewhere else, that is not good news," Mr Lyons said.

He said that the longest-ever run of price hikes - dating back over the last 75 years - may be coming to an end. But pointed out that prices are still incredibly high - and in Dublin have more than doubled since bottoming out in late 2010. "In Dublin 8, rents have increased by just over 125pc. The smallest increase was in South County Dublin, where rents increased by 'just' 90pc in nine years," Mr Lyons said.

"Since World War II, I can find only three phases where...rents increased for more than four years. The first is the period 1959-1964, just after the crisis of the 1950s. This upswing lasted five years. The second major upswing - between 1995 and 2001 - lasted six years.

"The current upswing in rents has lasted almost nine years and counting in Dublin."

READ MORE: Average monthly rent 373 euro per month higher than 2008 peak – report

In 2016 the Government introduced the Residential Tenancies Act which capped rent increases at 4pc per year in Rent Pressure Zones (RPZs).

However, properties exempt from the RPZ regulations include those that have not been rented for a period of two years prior to a tenancy, or new lets. And according to the report, average rents outside the key RPZs have increased by an average of 6.8pc year on year.

The national housing charity Threshold welcomed the reduction in the rate of rent increases shown, but noted that rent rises are still running well ahead of inflation and are threatening more and more people with homelessness.

"The fact that the rent inflation rate is down to 5.2pc nationally compared to over 12pc in the middle of last year is of course welcome," said CEO John-Mark McCafferty.

"However, rents have been at unaffordable levels for many people for several years, and the fact that they are continuing to rise is alarming. Relying on the market to eventually produce a levelling-out and a decrease in rents is clearly not an acceptable policy."

The new surge in accommodation costs is despite a slowdown in the rate that rents are going up. It was the slowest increase since mid-2012.

The slowdown in rental rises has been particularly evident in Leinster, but sharp rises continue to be experienced in Munster as wells as Connacht-Ulster, in the year to September, said.

The market has been helped by a 10pc increase in the number of homes available to rent nationwide. But there are only 3,500 rental homes available for the whole country.

Cork saw rents hit €1,372, after a 5.5pc rise. In Galway it now costs €1,300 a month to rent a home, up almost 6pc on a year ago. Limerick is not far behind with an average monthly rate of €1,219, also a 6pc rise in a year. Rents in Waterford are just over €1,000 on average with the rest of country seeing a rise of almost 7pc in the cost of accommodation in the past year to €1,001.

Irish Independent

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