The latest data from the Residential Tenancies Board has shown that rents bucked the moderating trend witnessed through 2018 with accelerated growth through the first quarter 2019 as further pressures come on policy makers to address Ireland’s severe rental stock shortage.
The figures show that average rents rose by 8.3% y/y nationally which represents the highest rate of growth since the second quarter 2016. The average national monthly rent now stands at €1,169 per calendar month which equates to 31% of the average household disposable income according to the Central Statistics Office (CSO).
Average Dublin rents were €1,662 per month in the first quarter 2019 (up from €1,532 at the same time last year). Dublin rents have now grown by 75% since the market trough in 2011 and are now 28% above the pre-crisis peak in the fourth quarter of 2007.
Rents for apartments outside the Greater Dublin Area recorded the sharpest increase with average rents up 3.8% q/q (9.8% y/y) in the first quarter alone as commuter pressures for those priced out of Dublin drive a surge in demand.
Nonetheless, Dublin apartment rents rose by a similarly dramatic 2.5% q/q (8.7% y/y) as most locations continue to see increases more than double of that guided by the 4% rent review cap in rental pressure zones.
The continued sharp rise in rents has meant that 19 new locations were designated as Rent Pressure Zones today meaning that rent increases will be limited to a maximum of 4% per annum. Over two-thirds of Irish tenancies are now covered by such rent controls.
According to Goodbody Stockbrokers, "The sharp acceleration in rental growth during Q1 2019 will not come as a surprise to market observers as despite a pick-up in units both in-planning, delivery remains muted. Supply remains highly constrained with demand strong and aided by the limiting nature of the Central Bank mortgage rules (see the latest opinion piece by our Chief Economist)."
They added, "Though the supply side is being slowly addressed (with a critical role being played by international capital providers) we expect to see further locations designated as rental pressure zones over the coming year."