The Irish rental market remains in difficulty, as shown by the latest report from Daft.ie, the property website. Annual rental inflation across the State at 7.2 per cent is a multiple of the general rate of inflation and, after a period of slowdown, the rise in rental costs in Dublin has accelerated again.
Much of this comes back to supply. Outside Dublin, a severe lack of new rental properties led to a double digit growth in rentals in many areas last year, with some moderation now to 8.9 per cent. In Dublin, there was a more modest 2.6 per cent rise in 2023, but this has now doubled to an annual rate of increase of 5.2 per cent.
In other words trends across the State appear to be converging to annual increases in the high single figures on rental rates which are already unaffordable for many. Nationally, the average cost of new rentals is €1,935 and in Dublin it is €2,476.
The Daft.ie report ties the revival of inflation in Dublin to a drop off in new private rental supply. An increase in new apartment supply to 9,000 in 2023 helped to moderate prices, it says, but investment funds have pulled back due to high building costs and the rise in interest rates after the middle of 2022. This lack of supply risks inflating Dublin rents yet further, it says.
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All the parties have proposals on rental in their manifestos. However, the focus of the debate is on increasing the supply of homes to buy and helping people to do so, while also increasing the provision of affordable properties for those who cannot pay market prices. The risk is that the rental market – and particularly the private market on which many rely – takes second place in a political philosophy which puts the emphasis on home ownership.
The housing crisis will not be fixed without addressing the rental market. The Commission on Housing had some useful proposals here in terms of encouraging supply, the funding of social rental models and how to operate rent controls in a way that does not undermine private investment. Home ownership is the legitimate aspiration of many, but rental reform remains essential too.