Spiralling rent costs reflect multiple property problems

THE pressure valve that is the Irish rental sector continues to rumble as latest figures released by the property website Daft. ie indicate. For the third quarter of 2017 rents in Kerry jumped by 10.5 % on last year. A figure of €728 is now the average rent in the county.

Overall, the rise is a third higher than when rents were are at their lowest, while a hike of 3% on the second quarter figure for 2017 is also the case.

One of the main reasons cited for this continuing spiral within property circles is a lack of housing supply; however, as mentioned in a previous issue of the The Kerryman Property Supplement, this is but one reason why the rental sector is under immense pressure at the moment.

Essentially, the rental sector is coming under pressure from two types of demand: people who have no interest in acquiring a mortgage or gaining a foothold on the property ladder, and, secondly, renters who are unable to save for a mortgage deposit that would release them from the rental sector. When combined, both these factors - added to the tardiness of building new houses – makes rental accommodation more in demand than housing stock, which is a hugely conflicting situation to find ourselves in.

The Daft.ie report also found the majority of properties in Kerry are experiencing a hike in rent with the exception five-bedroom houses, which have dropped marginally by 0.4% to €759. This is also suggestive of a greater need for variation in the type of property required as there is no fixed ‘unit type’ to suit all buyers/renters.

This view is borne out by the fact average rents for one bed apartments in Kerry has increased by 12% to €492; 11% rise for two-bed houses to €572, and a jump of 10% for a three-bedroom house which now stands at €686. The government not only needs to provide more housing, it also needs to make provision for people’s housing requirements.

This generation of property buyers are also extremely mindful of the anguish caused to friends, brothers and sisters in the previous property crash of a decade ago. Naturally enough, this is also contributing to the static slowdown in people wanting to commit to a 30-year mortgage on a house they think will be cheaper in a year or so. Moreover, it’s hard to blame them given that many sellers are withholding from selling property thinking prices will soar at any minute. This basically means the entire property market is running to a standstill with the majority of back pressure affecting the rental sector. The sad part is this ‘hamster wheel’ property scenario looks set to keep spinning for the foreseeable future.