House hunters moving back home to save €20k

TD says that yearly rent in Dublin is now €24,000

YOUNG house hunters are moving back home with their parents to avoid skyhigh rents as they struggle to save up for a deposit.

Soaring rents mean people – particularly couples – are saving as much as €20,000 a year by moving home, according to Dr Lorcan Sirr, lecturer in housing at the Dublin Institute of Technology.

Tenants now pay €12,000 more in annual rent than in 2011. Nationwide rent increases for new tenancies grew by 9% in the last months of 2021, Residential Tenancies Board (RTB) figures show.

Dr Sirr said yesterday: ‘People are moving home to save, that has happened traditionally over the years. But it was accelerated during Covid when people had to move home. They discovered they could save a lot of money by not forking out €1,500 a month.

‘Going down for last five years’

‘Couples could be saving €20,000 a year. It means that your goal of home ownership is much more realistic, feasible and achievable.’

He believes the extra savings are partly behind the recent surge in prices, combined with the shortage of homes for sale.

‘There are definitely people with money out there. Also, the amount of housing coming to the market every year has been going down for the last five years,’ he said.

Last year, just 5,700 new homes came on to the market – about a quarter of the total number of new builds (out of 20,500).

Five years ago, nearly half of new builds were for sale. This is due to local authorities buying properties for social housing coupled with increases in the number of buy-to-let mortgages. ‘Even though housing output has gone up by nearly 50%, the amount of houses available has gone down by nearly 50%’ Dr Sirr added.

Taoiseach Micheál Martin has described the rent levels for new tenancies as ‘very worrying’ and

‘not satisfactory’, blaming the rent costs on supply issues. Figures released by the RTB show the average rent for new tenancies was €1,415 by the end of last year.

The RTB rent index measures rental price developments faced by those taking up new tenancies in the private rental sector.

It shows the number of new tenancies registered with the RTB has fallen, with a year-on-year reduction of 48%. The level dropped to fewer than 9,350 new tenancies last year.

Sinn Féin leader Mary Lou McDonald said the report makes for ‘fairly devastating reading’.

‘The average new rent in the capital now stands at nearly €2,000,’ Ms McDonald told the Dáil. ‘The rent crisis is hammering a generation today, and robbing them of their aspirations for tomorrow, for their future.’

Mr Martin told the Dáil that closure of the construction industry during the pandemic is still being felt. He said the building of 35,000 homes got under way in the 12 months up to March 2022 and that 43,000 planning permissions were granted in 2021 – a four-fold increase on 2011. ‘The RTB index relates to new tenancies. The ESRI [Economic and Social Research Institute] are saying that if it wasn’t for the Rent Pressure Zones and restriction to 2%, rents would be far higher in existing tendencies, but for the limits that we’ve put in terms of the rent pressure zones,’ Mr Martin added.

‘In terms of new tenancies, yes, the increases are very worrying, they’re not satisfactory, but they are related to the supply issue.’

Average rental costs for new tenancies in Dublin are now more than the annual income of those on the minimum wage, according to Social Democrats Housing spokesman Cian O’Callaghan.

‘Renters in Dublin today will pay €12,000 more in rent per annum than they did in 2011 – and that’s just the annual increase. The average annual amount they will spend on rent in Dublin is nearly €24,000,’ he said.

‘For context, workers on the minimum wage – a paltry €10.50 per hour – earn just €21,840 in a year. How are workers on the minimum wage – and there are plenty of them – supposed to survive when average rental costs now exceed their annual gross pay?

‘Rents are now unsustainable, not just in Dublin, but all over the country. According to the RTB, rents in Roscommon increased by 25% in the fourth quarter of last year and rents in Waterford were up 24%. There were double digit rental increases in 14 counties in the final quarter of last year.’

He added: ‘The Government has conceded that there is a crisis. But where is the evidence it is dealing with it? The record of this Government is clear – the crisis is getting worse. Unless it radically revises its housing plans, this deterioration will continue.’

‘Increases are very worrying’