Rental inflation across the country halved in 2023, driven by a slowdown in rent increases in Dublin as a “surge” of apartments have entered the capital’s rental market in the last three years.
The latest rental report from Daft.ie shows that average rents rose by 6.8 per cent nationally in 2023, less than half the near-record 13.7 per cent inflation seen in 2022.
Average national rents rose by 1.5 per cent in the final three months of the year, the 12th consecutive quarterly increase but the second smallest. Across the country average rent now stands at €1,823 per month.
The slowdown in inflation in 2023 was driven by Dublin, where rents increased by just 2.6 per cent during the year, compared to an average rate of 10.6 per cent elsewhere in the country.
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The county with the highest rent inflation was Donegal, where average rents increased by 20.2 per cent between 2022 and 2023. This was followed by Mayo at 16 per cent, and Cavan at 15.6 per cent.
Economist and report author Ronan Lyons said the slowdown in rent inflation in Dublin was down to a “surge” of 20,000 new apartments coming on to the rental market between 2021 and 2023, more than three times the number of apartments built in the entire rest of the country in the same period. He noted that in 2017 and 2018 roughly 33 apartments were being built per week in Dublin, a figure which rose to 175 per week by 2023.
Mr Lyons said that new apartment developments were the “delayed fruits” of a number of favourable factors in the late 2010s – including the macroeconomic environment, the strategic housing development initiative, the build to rent planning code, and the need for new rental accommodation.
“The need for new accommodation remains – and outside Dublin hasn’t been addressed at all. But all of the other factors are gone. Unless policy actions are taken to change course over the next few years the number of new rental homes built in Dublin will fall again, while it will remain close to zero elsewhere in the country.”
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Pat Davitt, chief executive of the Institute of Professional Auctioneers and Valuers, said large-scale investment in the property market “has really not expanded much outside of Dublin”.
“Since the ECB [European Central Bank] has increased interest rates the future of such investment is looking a lot weaker,” he said, adding that the future for rental supply “looks challenging”.
He called for policymakers to “dispense with punishing” private landlords and look to incentivise the building of homes, pointing to a recommendation of the International Monetary Fund to replace rent caps, such as those currently in place in rent pressure zones, with more targeted supports for poorer households.
The total number of properties available to rent across the country on February 1st was just over 2,200. Slightly higher than the figure on the same date a year ago, this is still less than half the number of properties available on the same date in 2020.
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