The latest report on the rental market by property website Daft.ie shows the spiral in the cost of new tenancies continues apace. Particularly hard hit at the moment are Ireland’s regional cities, where little or no freshly-built supply has come on stream in recent years to meet strong demand. But prices continue to rise across the board, with average new rental costs of €1,922 per month, up 7.3 per cent on the same period last year.
The Daft.ie figures look at the cost of new tenancies. They are thus a reflection of the market facing those wanting to rent for the first time, or seeking to move from an existing tenancy. Those already in rental arrangements are seeing a lower level of increase, due to rental pressure zone (RPZ) rules. And given the likely hike in rent they would face whey they move, most are holding on to existing tenancies.
The relentless rise in rental costs – only briefly interrupted in Dublin by the pandemic – means the cumulative increase since 2019 is a hefty 41 per cent. Over the past year, rental growth in Dublin has moderated, probably due to some new supply, but in Limerick rental costs are up 21 per cent while most other regional cities are showing double digit increases.
The rental market is at the centre of the housing crisis and - as across all areas of housing - more supply is the only answer. Yet there seems to remain a policy ambivalence to this, with homes to buy favoured. Both are needed for a properly functioning market and a mix of private and public provision is the only way forward, with many projects effectively ending up as a joint venture between the two sides.
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Addressing this is a long-term project which simply must include planning reform and ensuring all the other correct regulatory and land tax measures are in place. Otherwise policy will just amount to more “schemes” to try to step in where the market is failing, with limited success.
Admitting that problems will take time to fix is not attractive for politicians. But it is an essential step in addressing the rental crisis.