The supply of rental properties has more than doubled in the past 12 months pushing rents down by an average of 1.8 per cent, according to a report by property website Daft.ie.
The report says the total stock of rental properties advertised on its site rose above 15,000 for the first time in the second quarter of this year - more than twice the level of a year ago.
The increase in supply has pushed rents downwards by an average of 1.8 per cent which, it said, was the first year-on-year negative change in rents since autumn 2004.
The national average rent average was just over €1,350 in the second quarter of this year, down from €1,400 at the end of 2007.
The report said rents in Ireland’s five main cities fell 3.5 per cent in the last three months, and were now about 2 per cent lower than this time last year.
However, the fall in rents in areas outside the major cities was smaller at 1.9 per cent - however rents are 4 per cent below where they were a year ago
The report also indicated a sharp fall in average rents in Dublin's commuter towns (Celbridge, Naas, Leixlip, Bray, Maynooth and Greystones) particularly for one and two bedroom properties.
Daft.ie economist Ronan Lyons said: “Overall, rental inflation looks to have peaked - and more than likely, so have rents, as the bounds of tenants' ability to pay have been reached.”
“With interest rates back at normal levels, demand has contracted and people are looking very closely at what they can afford,” he said.