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21,000 apartments were built in Dublin between 2021 and 2023, more than three times the amount built outside of the capital. Alamy Stock Photo
Daft rental report

Rent price hikes are finally dropping in Dublin but are rising everywhere else

The price of rent is still, however, 36% higher than it was just four years ago nationwide.

AVERAGE RENT INCREASES in Ireland fell significantly in 2023, for the first time in two years, as a result of increased supply in Dublin.

While rent prices are not dropping in any region of the country, price inflation rates are beginning to fall as a result of a surge in apartments being put on the open rental market in Dublin.

Despite this, what was once a Dublin problem is now an issue in rural areas, as towns and cities outside of the capital are seeing double the yearly increases in rent prices of Dublin and dwindling supplies, according to the latest report.

Author of the report, Ronan Lyons, links these increases to societal changes in Ireland seen after the pandemic, such as a less Dublin-centred approach to work, with renters from outside the capital instead choosing to live closer to family and work from home.

The latest Rental Report from the property portal said the average increase in rent during 2023 was just 6.8% nationally, compared to increases of 13.7% in 2022 and 10.3% in 2021.

However, while prices in densely-populated Dublin have continued to stabilise as a result of an increased supply in the county, the report highlights concerns that future, harsher hikes could be seen in rural areas as a result.

This is due to rent prices in rural areas being traditionally cheaper and rising from a lower base point, as remote workers and other tenants are choosing to move out or stay away from the capital.

The report’s figures reflect this difference between Dublin and Rural, when rents in the open market increased by just 2.6% during 2023 in the capital but by 10.6% everywhere else.

The report details that areas like Galway city, Cork city, Limerick city and Waterford city all saw more than double the yearly increases of Dublin.

Boom in supply for Dublin caused increase rates to fall

In the last three months of 2023, the average price of rent for a property in Ireland was €1,850 per month, an increase of €25 when compared to the previous three months.

While the price of rent has still drastically increased (+36% on average), when compared to prices before the Covid-19 pandemic, the average yearly increase has fallen for the first time in the last two years.

average national rent Average rent prices nationally and in some areas of Ireland. Daft Rental Report Q4 2023 Daft Rental Report Q4 2023

Lyons, who is also an economics professor in Trinity College Dublin, said the driving factor of the decrease average inflation of prices in the rental market nationwide is as a result of a boom in supply over the same two year period in Dublin.

Lyons said that while large increases were seen in 2021 and 2022, respectively, a “surge” of 20,000 new apartments became available on the open market just in Dublin.

This figure is more than three times the amount built in the rest of the country, in the same period, the economist said.

He added: “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.”

Increases in demand, prices and people – but not enough supply rurally

Falling inflation rates are not seen when outside of Dublin. The average price of rent for areas outside of all Irish cities sits at €1,489 as of December, a 10.8% increase compared to the previous year. 

Ireland Q4 23 V Q4 22 Rent prices in Ireland, per county, in Q4 2023, compared to Q4 2022. Daft Rental Report Q4 2023 Daft Rental Report Q4 2023

Lyons links these increases to societal changes in Ireland seen after the pandemic, such as a rise in remote working, allowing prospective renters a choice at living elsewhere and not having to tie themselves down to somewhere close to the office.

“But in effect, this simply took what had been an urban problem over the preceding decade – a worsening shortage of rental accommodation – and made it a national problem,” he added.

Worryingly, these increases are also coming from areas with much lower base points compared to the capital.

This is backed up when looking at the post-Celtic Tiger low points where rural and Dublin markets seem largely the same, with increases in rent in Donegal of 138% and in Dublin of 133%.

Outside the cities, the smallest annual increase was seen in Dublin’s commuter counties (7.5%) while the largest increase was seen in the three Ulster counties, where market rents were almost 17% higher than a year earlier.

Connaught and Ulster saw rents continue to climb in the last three months of 2023. Over the last year, the stock of available rental accommodation in Connaught and Ulster has decreased by 13%.

Lyons, commenting on the report published today, said it “remains incumbent” on policymakers to deliver a healthy rental market, through increasing the supply around the entire country.

The author of the report hopes lessons will be taken from what Dublin experienced in the last year.

 Note: Journal Media Ltd has shareholders in common with publisher Distilled Media Group.