THE LATEST RENTAL REPORT from Daft.ie shows residential rents fell by just half a percent in 2010, compared to 15 per cent during 2009.
But the levelling off hides some different regional trends as the gap between city and non-city rents increases: rents in some areas of Dublin are up 2.2 per cent, while outside the main cities, they fell by 3.5 per cent.
The highest drops in average rents were seen in Co Leitrim (down 7.1 per cent), Co Kerry (down 6 per cent), Co Clare (down 5.7 per cent) and Co Wexford (down 5.5 per cent).
In Cork and Galway cities, rents remained generally unchanged over the year, but fell by between 2.5 and 4 per cent in Limerick and Waterford.
Ronan Lyons, the economist at Daft.ie who compiled the report, told TheJournal.ie that rents are now cheaper than they were 10 years ago and the overhang of available rental properties has largely been soaked up.
The key condition for a levelling off in prices, he said, is clearing that overhang. While that happened in Dublin and to a lesser extent in other cities around the country, oversupply persists in some parts of the country and continues to drive down rents.
Lyons says that as stable rents in Dublin through 2011 could indicate a stabilisation in the labour market and the broader economy.
Economic barometer
Commenting on the report, economist Lorcan Roche Kelly said that the latest rental figures suggested the market “may be returning to an even keel”. He also said that if the ESRI’s projection of 100,000 Irish people emigrating in the coming two years is accurate, landlords could find it difficult to replace lost tenants.
However, Ronan Lyons said it was hard to project just how migration would affect the rental market without knowing who would emigrate or from which parts of the country.
Roche Kelly added that the housing market is a business cycle which cannot recover without an improvement in the country’s economic outlook:
Until the business cycle turns up again, any argument that favours ownership over renting can only be based on the traditional Irish arguments in favour of property ownership rather than the harsh economic realities we are now facing.
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