High housing costs in Dublin could be limiting ability of companies to attract staff

Household rents are rising at their fastest annual rate since 2007, with prices doubling since 2012. Photo: Bloomberg

Paul Melia

High housing costs in the capital may be limiting the ability of companies to attract workers, a report from the four Dublin local authorities says.

Household rents are rising at their fastest annual rate since 2007, with prices doubling since 2012, the Dublin Economic Monitor report reveals.

The city is approaching "overcapacity" due to the lack of housing stock and high prices being demanded, while low unemployment rates are exacerbating the problem.

Dublin remains a "hive" of economic activity, with unemployment falling and consumer spending continuing to grow year on year, but the 15th edition of the report warns of possible problems ahead.

It says average monthly rents are in excess of €1,500 for the past year, and Brexit fears have weakened consumer confidence.

It finds that the city is showing symptoms of "overcapacity", with the cost of residential housing at an all-time high.

"Without doubt the overall outlook for Dublin remains broadly positive, though housing continues to present the greatest challenge for the city," Ciara Morley, from EY-DKM Economic Advisory, which compiled the report, said.

"Both average rents and house prices are in excess of levels recorded some 10 years ago, and with both housing completions and commencements coming off such a low base, it will be some time before we see these pressures alleviated.

"This, coupled with the fact that the unemployment rate in the city is currently at its lowest level since 2008, and edging towards full employment, means that firms may find talent attraction a growing challenge in the years ahead."

The report looks at a range of economic indicators driving the city's growth, including employment, property and rental prices, housing commencements, hotel rates and public transport use, to determine its economic performance from the height of the boom to the economic crash and subsequent recovery.

It says the unemployment rate in Dublin now stands at 5.2pc, seasonally adjusted, with 11,300 additional people becoming employed in the three months to the end of June this year. Unemployment in Dublin was last this low in the first quarter in 2008.

But average monthly residential rents in Dublin stand at €1,587, €128 higher than 12 months ago, and the greatest annual increase in value since the Dublin Economic Monitor began in late 2007. Dublin house prices are now at their highest level since the end of 2008, up 95pc since 2012.

Separately, the EMEA Tech Cities Index ranks Dublin third due to the scale of tech companies seeking to secure accommodation in the city, with many expanding their operations in the first half of this year, accounting for 40pc of office take-up.