Rents rise 10.4% as average price hits €1,227
A new all-time high for rents has now been set for the seventh quarter in a row, according to the latest report from the property website Daft.ie.
Its quarterly Rental Report says rents rose across the country by an average of 10.4% last year, while the mean monthly rent during the final quarter of 2017 was €1,227.
In Dublin, the increase in rents in the year to December was 10.9%. That is 26%, or almost €380 a month, higher than the previous peak in 2008.
In the cities of Galway and Waterford rents rose by just over 12% last year , while in Limerick city, the increase was nearly 15%.
In Cork, the rise in rents was almost 8%.
Year-on-year change in rents - Q4 2017
- - Dublin: €1,822, up 10.9%
- - Cork: €1,180, up 7.7%
- - Galway: €1,096, up 12.4%
- - Limerick: €1,004, up 14.8%
- - Waterford: €835, up 12.1%
- - Rest of the country: €860, up 9.8%
There were just over 3,100 properties available to rent at the beginning of February, which is the lowest since the series started in 2006.
Economist at Trinity College Dublin and author of the Daft report, Ronán Lyons said: "2017 marks the fourth consecutive year of double-digit gains in rents nationwide.
"The underlying pressure for rising rents remains due to a chronic shortage of available rental accommodation, at a time of strong demand."
Speaking on RTÉ's Morning Ireland, Mr Lyons said the report captures the market value of rents, but a tenant could end up paying more than the asking price if demand is high.
He said: "If market conditions are tight and a landlord posts a home for say, €1,200, it could very well be the case that the person who moves in is the person who offers €1,250 or €1,300, particularly when market conditions are tight.
"So there may actually be a downward bias in these figures. Rents could actually be higher than those figures."
He said it was clear that rent pressure zones were not working, adding that the shortage of accommodation must be addressed before the problem can be solved.
"If you want to stop rents rising, don't ban them from rising, tackle the underlying problem, which is a lack of supply," he said.
"I appreciate that if you limit rents from rising in the short term you protect some sitting tenants, but there are people who lose out because they can't move in somewhere. So, if you really want to solve this problem, rent pressure zones are not the way to do it. It's getting more supply."
In response to the report, the Government acknowledged that rental prices are likely to continue rising in the short term "until such time as the supply response helps to balance the current high demand, particularly in our cities".
It said it had "prioritised a range of further actions to ensure that existing rent predictability measures, such as the rent pressure zones and increased security of tenure, are fully respected and enforced".
However, a number of housing agencies, such as the Simon Communities and Focus Ireland, have said that the rent pressure zones were not working.
Focus Ireland Advocacy Director Mike Allen said: "The DAFT report clearly show that actions the Government has taken - such as rent pressure zones - have not been implemented effectively.
"Rents have now reached an all-time record of an average of €1,227. While the rent pressure zones have helped curtail rent increases for some sitting tenants there are so many loopholes in the legislation it is still far too easy for landlords to ignore."
The Irish Property Owners' Association, which represents the interests of private residential landlords, said the figures are rents being asked for on new tenancies and are not reflective of existing tenancies that are being renewed with the Residential Tenancies Board.
The association said every euro of rent received by landlords is significantly reduced by a variety of taxes, levies, charges and maintenance costs.
Margaret McCormack of the IPOA said keeping existing landlords in the sector is necessary to help deal with the problem of rising rent.
Also speaking on Morning Ireland, she said the constant intervention in the market is making investors nervous and it has been discouraging investment.
She said when there was a surplus of accommodation, rents went down and she said that landlords are being lost from the sector.
She said in 2012, there was 212,000 landlords and now there are around 175,000.
"If we don't look at the fundamental problem and stop all the knee-jerk reactions, we have to get more properties out there, we have to keep our existing landlords and at the moment we're not," she said.
The National Spokesperson for the Simon Communities says it is clear that rent increases are "absolutely" linked to the homelessness crisis.
Niamh Randall said rent pressure zones are clearly not working and intervention in the private rental sector is needed, in order to prevent more people from becoming homeless.
"We need to look at intervening in the private rental sector looking at HAP, look at rent supplement as prevention.
"This is about homeless prevention at this point in time. So unless we look at this as an emergency piece that we need to really intervene to keep people in the homes that they have, to prevent people from becoming homelessness and then look at how we support those trapped in emergency accommodation, to leave homelessness behind.
"Of course it's about supply, of course it's about affordable housing and it's about the State building home but as emergency intervention, we need to look at the private rental sector."
She said the Residential Tenancies Board needs to be able to hold landlords to account and it is unfair to expect tenants to police the situation, adding that a register for all rents would be a good idea.
In addition, she said, any tax breaks given to landlords should be subject to conditionality such as the guarantee of rent certainty and high quality accommodation.
Elsewhere, the Social Democrats co-leader, Catherine Murphy, called on the Government to immediately introduce rent caps.
The Kildare North TD wants an immediate linking of rents to the Consumer Price Index until there is sufficient housing available to drive down costs.