A new report from Daft.ie shows that residential rents in Ireland continue to surge to new record highs on the back of a very tight supply situation.
Irish rents increased by 13.4% year on year in the first quarter, in line with the growth rate seen in the fourth quarter. This took the average national rent to €1,131, 10% above the previous 2008 peak.
The stock for rent nationally stands at just 3,100 properties, close to an all-time low. In Dublin, rents grew by 14% year on year in the first quarter, taking the average rent to €1,668 per month, 15% higher than the previous peak after growing by 66% in recent years.
Goodbody Stockbrokers have today warned that Rent Pressure Zones (RPZ), which restrict rental increases to 4% per year in designated areas are not working, but this was always going to be the case.
The report shows a divergence has opened up in recent years between sitting tenants and new leases. Rents for the former group increased by just 27%, while market rents rose by 50%. This is being exacerbated by the introduction of RPZs, as well as being a disincentive for new investors into the market.
According to Goodbody Stockbrokers, "With stock levels remaining close to all-time lows, rents are likely to continue to rise from here, with a two-tier market between new properties and sitting tenants (even with the RPZs). Supply-side incentives will have to be once again contemplated if a dent is to be made in resolving this issue."
Source: www.businessworld.ie