Changes leave rental system in ‘holding pattern’
Inflation in the open market for rents remains “stubbornly high”, according to Trinity College economics professor Dr Ronan Lyons.
He was writing in the latest report on rents from property website Daft.ie, which showed that rents increased at an annual rate of 6.9% in the year to the end of June.
Rents in the second quarter (Q2) of this year were up 1.6% compared with the first quarter.
The report shows that the average monthly rent in Q2 was €2,055.
‘Predictable effects’
Lyons described the latest annual rise as “effectively in line” with the average of 7.2% for the previous seven quarters.
The economist argued that the rent controls introduced in 2016 had had “predictable effects” – reducing both supply and investment in new rental homes.
“Whereas Ireland was once able to attract over 15% of investment in rental housing going to the UK and Ireland, that share fell below 4% last year,” Lyons said.
‘Potential turning point’
He added that the changes in rent pressure zones (RPZs) announced earlier this year marked “a potential turning point” for the rental market.
“The system is in something of a holding pattern until the new year, when the changes actually take effect,” Lyons stated.
He cited concerns that the “effective pause” on changing the system would lead to rental homes that came empty being held off the market until those new rules came into effect.
Lyons said that it was too early to tell if that was the case, adding that the next report in November would provide a clearer picture.
Available properties down
The Daft.ie figures showed that there were 3,400 rental homes listed on its site during July, the first full month since the announced changes to RPZs.
While this figure was above those seen in the previous few months, it was down 7% compared with July last year.
The figure for 1 August, however, showed an annual drop of 15% to 2,300 properties.