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SOARING RENTS ARE having a “disastrous effect” on social cohesion and the country’s competitiveness as the cost of housing continues to rise.
Rents rose nationwide by an average of 11.7% in the year to September 2016, according to the latest quarterly rental report from property website Daft.ie.
This is the largest annual increase in rents ever recorded in the Daft.ie report, which extends back to 2002. The average rent in Ireland during the third quarter of the year, between July to September, was €1,077 – also an all-time high for the report.
Annual rental inflation in Dublin was 12.1%, its highest rate since late 2014. This reverses a trend from late 2015, when rents outside of Dublin had been increasing at a faster rate than those in the capital.
Ronan Lyons, Trinity College economist and author of the Daft.ie report, noted that there is now “little to choose between Dublin and other markets”.
“The rate of inflation in Dublin rents has increase from 8.2% in late 2014 to 12.1% between July and September,” he said.
“Outside Dublin, the average rate of inflation is 10.9% and is only significantly below this in Connacht-Ulster. Even there, Cavan is an exception.”
‘Disastrous’
He added: “This is having a disastrous effect on social cohesion as well as on Irish competitiveness. This rise in living costs of almost three-quarters, in less than five years, is a symptom of strong demand for housing – as economic recovery continues and the population continues to grow.
But there is nothing inevitable about housing costs rising with demand. That only happens when supply fails to respond. And the complete absence of any meaningful level of construction in Ireland over the past five years is a systemic failure in desperate need of policy solutions.”
The average Irish rent has risen by 45% since bottoming out in late 2011, and is now almost 5% above its peak near the end of the Celtic Tiger.
There were just over 3,600 homes to rent nationwide at the start of October, 12% fewer than on the same date a year previously
Challenges
Lyons said that there are two main challenges to building more housing units.
“The first is mindset, particularly on the part of local authorities. Ireland is not at all immune to nimbyism and its excuses for pushing development onto greenfield sites, rather than in already built-up areas such as suburbs and market towns,” he said.
However, it is precisely the densification of our suburbs and towns that Ireland needs.”
He added: “The second challenge is construction costs. It has never been viable to build apartment blocks in the vast majority of this country. Where it has been built, it has been due to subsidies.
“There is no more urgent task facing the minister for housing and others involved in ‘Rebuilding Ireland’ than understanding why the costs of building, and building apartments in particular, is so dramatically out of line with our own incomes, and indeed with the cost, in other countries.”
Fora.ie is part of Journal Media Ltd, which has some shareholders in common with shareholders in Daft.ie.
Written by Paul O’Donoghue and posted on Fora.ie
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The delay in responding to this issue has been been criminal.We have had a government more concerned with making sure that the rich got richer and the various institutions of finance got their life saving money,meanwhile the citizens of this country were made to feel grateful for the handouts from Europe that they gave us in order to pay these various institutions of finance.
House prices have been on the rise for the last five years and rents too,yet They completely ignore this trend and do nothing but plan.Promises broken everywhere and still we see absolutely no end to this issue and the rich get richer and the rest of us can too hell……and that is and has been the simple truth of it….
@Alan Ball: why would the Dail respond half of them are landlords..its a joke but your right something needs to change quick
and how much of this is driven by the same funds that bought off Nama and now want their money back I wonder… they put up rents and everyone else follows…
The landlord TDS will be delighted with this news. Watch the homeless list grow even further! !
@Ian Scott: Rising rents are the result of increased housing demands especially in Dubli!n and other centres of population. The same thing is happening in the UK at present as governments fail to tackle housing shortages and developers are holding up building new affordable homes so as to maximise their profits on existing builds. Council planning departments need more powers to recind planning applications if development does not begin within two years. Developers buying land and holding on to it for years is speculation and should be outlawed.
Noonan said it straight out that he wants property prices to rise last year. This is government policy. Without a rise in pay this is a complete joke. It’s a tax on non property owning workers. Time to build and occupy empty units. Joke of a government.
@prop joe: It ais a joke of a government that see’s a housing shortage problem and does nothing about it. Increasing prices is playing into the developers hands and making home ownership impossible for the generation of hard working young people and families who deserve it most.
Cost of living goes up and up, IBEC and their lackies demand ‘competitive’ wages (aka pay cuts) and the country thinks public servants should work for free. A great Republic indeed
Keep the recovery going for the rentier elite and vulture fund parasites. Prosperity for the capitalist class and austerity for the working class. It’s the blueshirt way. And ditto for FF and Labour of course.
This article addresses the problem perfectly, and rationally. Union solution: Public servants believe that private sector wages should be taxed at 99℅ in order to satisfy their wage demands. WallyNomics solution: Wally wants the ecb to print more money.
Alot of accidental landlords Wally have just put their tax returns in Wally with a large chunk of rental uncome being paid for paye, usi and prsi.
Buster Vl, “private sector wages”? You mean the money foreign multinationals give Irish people to work in their company. So these companies should pay more tax is the solution. But then if these companies upped sticks and left that would be the end of the Irish “private sector”. We should all be thanking these companies for staying and the government for having such a low corporation tax.
Can we build taller buildings now? Being stuck to low rise is sprawling the country out instead of up, and isn’t helping matters. It’s less attractive renting many miles outside your workplace.
Like it or not, city centres all over the world are centres for business actively. Ireland has plenty of land. Re zone and build!
@Paul Cunningham: But you won’t be able to see the Sun!
This is Ireland. The sun is out two weeks of the year.
@Emmet Purcell: I think your point has gone over people’s head. The nimbys who make the sun point are fueling this crisis. An taisce and those clowns.
How about a strike? Nobody in the country pays rent until it drops by 40%.
I pay 1400e for igloo(old house single glaze window) I have disability so I have frequent falls due very narrow staircase.In order to do such strike I guess you need to set up some sort of group on Facebook but honestly I don’t think that’s going to change anything.Lanlords have all rights to charge as much as they want.
Build more and more houses!
I suspect they mean just dublin. Rather than pay out rent alowwanes, or dublin allowance, surely the solution is to re zone land and build more houses. Win win reduce house prices and rents. The pressure of pay claims at the moment could by eased off if dublin houses were affordable. Given the site, it should cost no more the build a house in Dublin than Limerick.
Theres been a few stupid decisions made by goverment thats helped cause this – Removing pre 63′s/bedsits – taking supply from the market. Introducing 2 year rent reviews – cause accelerated increases to rent as landlords front loaded rents. Allowing banks demand vacant possesion and then not selling the properties – removing more supply from the market . Putting tenants into hotels when the solution was to increase rent supplements The goverment tried to mend a gun shot wound with a plaster !!!
@Gary Wildman: Don’t forget they made it illegal to advertise a property with the phrase “rent allowance not accepted”. The best way to make sure those on rent allowance can’t/don’t apply is to put the rent up to a level that is out of their price range where rent allowance won’t cover the difference.
@Kenno PK: that’s been a long term problem in Ireland going back to the tenement era and before. We need legislation preventing anyone who owns more than one rented property from taking a seat in the Dail. Its an unacceptable conflict of interest. One such property will allow for the accidental landlords out there who are mortgaged and in negative equity on their rental.
@Marlowemallow: This is a Democracy – you can’t block anyone from being elected to the Dail
Whos responsible? FF FG Liebour ?
Well they got what they wanted , now to deal with that nuisance , that’s the homeless .. Banks ok though..
Ah to be a landlord.. Watch your wealth grow and grow with a large slice of help from government.
Going to have to move jobs out of Dublin and around the rest of the country. Spread out a little. Right now we got the absurd position where most entry level positions are in Dublin yet the rent costs nearly require a management level salary to have any decent standard of living beyond paying food, rent and bills.
Mickey Mantle won’t pay the rent
@Chris Kirk: That’s right. Its a global problem related to both supply and demand. Demand is being skewed by quantitative easing globally and by a scale of immigration into some countries that our supply systems cannot keep pace with.
@Marlowemallow: Are you saying therefore that wealthy international development companies should buy up the country and speculate on when they decide to build upon it to maximise their corporate profits..
@Chris Kirk: No that’s not what I’m saying. I’m not at all sure where you got that idea from either.
Coveney says that there will be 47000 new houses built by 2020.
That means an average of 8000 per year.
Will he and the government resign on 1 January 2017 if this year’s figure is not met.
If not then how do we force them out?
@john: You most certainly can, if they fail to meet the conditions imposed. Bankrupts were barred from being TDs untill 2014 and still are in half of Europe.
@Marlowemallow: We currently bar adults between 18 and 21, non Irish citizens, judges, gardai and defence forces from running for election.
Clonmel in Tipperary has only 4 properties for rent at the moment, these are the next places in Ireland for families, single person becoming homeless, shocking and I’m sure its the same from many places out side of Dublin.
Organised chaos if you ask me!!!
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