Number of houses for rent outside capital dwindling

Tenants face soaring rates with availability of homes ‘close to zero’

URGENT action is needed to build homes to rent outside the capital – or the number on the market ‘will remain close to zero’, a new report shows.

And as the market tightens, average rents are soaring faster than wages, which is leaving tenants stuck in the ‘rental trap’, unable to afford a deposit to buy their own home.

Rents rose by an average of almost 7% last year to an average of €1,850 per month, according to the latest rental report by Daft.ie.

This is up by €485 from the €1,365 per month seen at the outbreak of Covid-19 in early 2020.

Trinity College Dublin economist Ronan Lyons has warned: ‘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.

‘The need for new accommodation remains – and outside Dublin hasn’t been addressed at all.’

Mr Lyons highlighted that the rate of apartments being built in Dublin has risen exponentially – in contrast with the rest of the country. This has seen prices in Dublin increase by just 2.6% in the past year, but the lack of properties for rent is much starker outside the capital. In Munster, the report states, there are 320 properties for rent, down from 975 in 2019; in Connacht/Ulster it’s down 13% in a year to 270; and in Leinster it’s down to 425, half of what it was in 2019.

In Dublin, the availability stands at 1,200, up 10% in a year, but below the 1,800 available in 2019.

Mr Lyons explained: ‘In 2017 and 2018, about 4,400 apartments were built in the country, the vast majority in Dublin and the vast majority of those for rental.

‘This rate, of roughly 33 per week in Dublin, has increased substantially in the last five years – Covid lockdowns notwithstanding.

‘In 2022, an average of 133 apartments were built per week in Dublin, while in 2023, that rate increased further to 175 per week.

‘This surge of 20,000 new apartments between 2021 and 2023 in the capital – more than three times the number of apartments built in the entire rest of the country in the same period – is what explains the slowdown in rental inflation in Dublin.’

And the problem is even worse outside Dublin as it ‘hasn’t been addressed at all’, he said.

Rents in Cork and Waterford cities rose by between 7 and 8% during 2023, while those in Galway and Limerick cities increased by 11.3% and 14% respectively.

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

Nationally, on February 1, there were just over 2,200 homes available to rent nationwide, up 6% on the same date a year earlier and the 11th month in a row of yearon-year gains in availability.

Mr Lyons said: ‘The construction of significant amounts of new homes to rent in Dublin over the last two years is reflected in the near-disappearance of inflation in market rents in the capital.

‘This is a welcome reminder that the basic economics of supply and demand work in rental markets and thus that new supply is the answer to strong rental demand.

‘However, there has been almost no new rental accommodation built outside Dublin, where acute rental shortage also exists. Further, the pipeline of rental projects in Dublin is likely to slow in 2024 and beyond. With significant viability challenges, it remains incumbent to deliver a healthy rental market around the country.’ In Dublin, rents in the open market rose by just 2.6% in 2023, compared to an average increase outside the capital of 10.6%.

Social Democrats housing spokesman Cian O’Callaghan said: ‘Ireland’s record-breaking rents continued to rise by 6.8% in 2023. People looking for a place to live now face average rents of €1,850 per month.

‘What is clear from this report is that the housing crisis is not just a city crisis. Rents outside of Dublin rose by a staggering 10.6% compared to 2.6% in the capital. Rural renters are facing unsustainable rent increases without the protections afforded to those living in towns and cities.’ He called for rent pressure zones to be extended nationwide, and said: ‘All renters need to be protected.’