Market rents in the first three months of the year were almost 12% higher than they were in the same period last year, according to the latest report from property website daft.ie.
The average market rent between January and March stood at €1,567 per month, the report concludes, which was up almost 3% on the last three months of 2021.
Market rents are now more than double the low of €765 per month seen in late 2011.
The rental report from daft.ie is based on the rents that property owners are seeking from perspective tenants.
The report does not reflect what tenants are paying in existing tenancies.
However, in this latest report, daft.ie included an estimate of the trend in rents for sitting tenants since 2010, as compared to new tenants paying market rates.
While inflation in market rents is currently above 10%, and market rents have doubled over the past decade, ‘stayer’ rents are estimated to have increased by just 1.5% over the past year and by less than 40% over the past ten years.
“In Dublin, the gap in rent increases since 2017 between movers – at 28% – and stayers – at 15% – is smaller than in the rest of the country, where it’s 50% versus 6%,” Ronan Lyons, Trinity College Economics Professor and author of the reports for daft.ie said.
“But nonetheless, these substantial gaps across all markets raise awkward questions about the focus over the last few years by policymakers on protecting rents for sitting tenants.,” he added.
Rents on new tenancies are being driven up by an acute shortage of properties available for rent.
According to calculations from daft.ie, there were just 851 homes available to rent on May 1.
That is down from over 3,600 properties available a year ago and another new all-time low in a series that extends back over 15 years to 2006.
“The recent fall in homes to rent is seen in all regions of the country, with an 81% fall in availability in Dublin and a 66% fall elsewhere in the country,” the report points out.
While there have been differences in regional trends in rents in recent quarters, the rate of increase was similar across all major regions between early 2021 and early 2022.
In Dublin, market rents rose by 10.6% year-on-year, while in Cork and Galway cities, rents rose by 10.2% and 13.8%.
Inflation was higher in Limerick and Waterford cities, at 15.5% and 16.2% respectively, while outside the cities the average increase was 12.7%.
“As ever, in a rental market dogged by chronic and worsening shortage of homes, the only real solution is to increase the number of homes. With more pressure from certain quarters to stop new rental homes being built, policymakers must hold their nerve,” Ronan Lyons concluded.
Speaking on RTÉ’s Morning Ireland, Ronan Lyons said things are “getting worse” for those in the open market.
Mr Lyons said the number of homes available on the open market “has collapsed” in the last year.
He said Covid-19 and the switch to working from home in certain sectors has enabled people in the rental market to look further afield.
“For example, Dublin’s commuter counties haven’t seen as much upward pressure in rents as counties further away from the main cities, which does suggest that people have been looking to see where rents are cheaper,” he said.
Mr Lyons said rent controls are effectively a measure to protect sitting tenants rather than those taking new leases, but those who are finding it toughest are those in the open market.
He said multi-unit rentals have started to come on-stream again, and if Dublin were to add 30,000 to 40,000 rental homes to the existing 150,000 or so, it would have “a big impact” on the affordability of existing properties.
“But unfortunately, that’s not a solution for places in the rest of the country where supply challenges are as bad,” he said.
“Reducing construction costs and bringing in much more widespread cost-rental and social-rental systems would be the solution to make sure that everyone has a home that meets their needs,” he added.