The spike in rents seen after the introduction of new controls was a “one-off” rather than the start of a trend, the author of a new report has said.
Daft’s latest report indicates rent inflation slowed to 1.4 per cent between March and June, having surged by a record 4.4 per cent in the first quarter as the new rules came in.
The Government’s new system allows landlords to reset rents to market rates in between tenancies while restricting no-fault evictions. Critics had feared the new system would result in a wave of evictions and price hikes.
The report’s author, Trinity College Dublin economist Ronan Lyons, said the first-quarter surge in rents was a “one-off jump” rather than the start of a new trend.
“Since March, where a tenancy ends a landlord may bring the rent to the market level; that is a one-time correction rather than a recurring increase,” he said.
“Once those tenancies have turned over, the effect fades,” said Lyons.
“If that logic holds, then the adjustment is largely complete in Dublin, where rents rose 0.8 per cent, and in the other cities, at 1.1 per cent, but is still working through elsewhere: 2.9 per cent in Leinster, 2.8 per cent in Munster,” he said.
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Daft’s report indicated the cost of renting increased by an average of 1.4 per cent between March and June with the increase taking the average open-market rent (for a two-bedroom apartment) to €2,204 per month.
This was 42 per cent above the pre-Covid level and 78 per cent higher than 10 years ago.
The annual rate of rent inflation was 7.7 per cent, up from 4.4 per cent a year ago.
The Daft report indicated inflation remained high in cities outside Dublin.
Market rents in the second quarter were 13 per cent higher year-on-year in Galway city; 12 per cent higher in Cork; and up 11 per cent in Limerick.
The rate in Waterford city, at 5.5 per cent, was comparable to that seen in Dublin, where market rents in June were 6.5 per cent higher than a year before.
There were just under 2,400 homes available to rent nationwide on the Daft.ie website at the start of the month, the company said.
This was an increase of 5 per cent on the same date a year earlier “but masks a sharp divide,” it said.
Availability in Dublin fell by 18 per cent over the year, to fewer than 1,150 homes, while across the rest of the country it rose by 40 per cent.
Nationally, availability remains well below pre-pandemic norms, when there were typically more than 4,300 homes to rent at any one time.
“Taking a step back, the latest report highlights an important shift in the market,” Lyons said.
“The additional cost of renting in Dublin, relative to the rest of the country, has fallen to its lowest level on record.
This has happened even as rents in Dublin have continued to rise, with rents in the city one-quarter above their pre-Covid level,” he said.
“Rents elsewhere have risen far faster, however: by 90 per cent in Connacht-Ulster and 75 per cent in Munster in six years. Rental scarcity is a national problem, and measures to bring forward new market rental supply need to be capable of working outside Dublin,” he said.