Estate agent Sherry FitzGerald is warning that a further 15,000 tenancies could be lost from the private rental sector this year as smaller landlords continue to exit the market.
In its latest quarterly report, the company noted that just 13 per cent of purchasers of second-hand homes with Sherry FitzGerald in the first three months of the year were investors while 36 per cent of sellers were landlords selling their properties.
“If this trend persists, we will see a net loss of 15,000 tenancies from the private rental sector in 2023,” it said.
Traditional buy-to-let investors have been exiting the rental market at a rate of two to one on the back of higher taxes and increased regulation, aggravating the supply pressures and pushing up rents. This was a key consideration in the Government’s decision to lift the eviction ban last month.
‘I wouldn’t like to be a young person. You get a job but you have nowhere to live’: Mixed odds on Government at Mullingar dog track
Election 2024 manifestos: the parties’ promises on housing, cost of living and health – and how they differ
Incumbent governments sometimes forget that elections are about the future
Sinn Féin denies planned ‘piggy bank heist’ as major parties clash over spending
“While the Government’s commitment to provide tax breaks for small landlords in Budget 2024 are welcome, it is not sufficient,” Sherry FitzGerald’s managing director Marian Finnegan said.
“Immediate action is required to address the impact of the exodus of landlords from the market this year. We urge the Government to provide further clarity on both the proposed tax measures and indeed on proposals such as the tenant-in-situ scheme,” she said.
[ Housing crisis greatest concern in Ireland, EU research suggestsOpens in new window ]
The company’s latest report indicates the average value of second-hand homes in the Republic increased by 0.8 per cent in the first quarter of this year, giving rise to an annual rate of inflation of 3.6 per cent, down from 5.7 per cent at the end of last year.
Sherry FitzGerald’s price gauge is based on valuations rather than asking prices or actual transaction prices.
'We have a lot of eggs in few baskets' - does the positive outlook conceal threats to our economy?
It indicated the value of second-hand homes in Dublin rose by 0.6 per cent in the quarter and by 2.9 per cent on an annual basis. The rate of price inflation outside of the capital remains higher, recording growth of 1 per cent in the quarter and 4.5 per cent over a 12-month period.
The company said the latest valuation figures indicate “that the market is stabilising after a period of strong inflation”.
“The analysis of the first quarter reveals a return to a more normalised level of price inflation in the residential market, following two years of heightened inflation in the post-Covid period,” Ms Finnegan said.
[ Irish property prices show ‘modest slowdown’, says MyHome.ieOpens in new window ]
The company’s report contains a review of transaction activity last year, which notes that housing sales exceeded their pre-pandemic levels.
Excluding block sales and new homes acquired for social housing, there were more than 59,500 housing transactions in 2022, it said, 9 per cent higher than the previous year, and 7.7 per cent higher than 2019.
Activity in the second-hand market was described as “brisk”, with about 49,700 units sold. This represents an increase of 5.8 per cent on 2021 and 8.4 per cent on 2019, it said.
The new homes market saw improved transaction activity in 2022, exceeding pre-pandemic levels by 4.2 per cent, Sherry FitzGerald said, with the greater Dublin area, which includes counties Wicklow, Meath and Kildare and which has seen the most construction activity over the past number of years, accounting for more than half (57 per cent) of new homes sales in 2022.
“However, while last year was a particularly strong year for new home sales, it is unlikely that this will continue into next year,” the company warned, noting 2022 was a record year for completions. All indicators now suggest this may not be repeated this year, however.
