Rate of monthly rent rises slowed in Q2

The level of increase in monthly rents slowed in the second quarter of the year, according to a new report from property website Daft.

Its Q2 rental report indicates that market rents rose by 1.4% between March and June, which Daft said was “a significant slowdown from the record 4.4% increase in the first quarter and slightly below the average quarterly increase seen over the last decade”.

It also said rental inflation “remains high in the four major cities outside Dublin”.

The report shows that market rents in the second quarter were 13% higher year-on-year in Galway city, 12% higher in Cork and up 11% in Limerick.

However, it notes that the rate in Waterford city at 5.5% was “comparable to that seen in Dublin, where market rents in June were 6.5% higher than a year before”.

Outside the cities, Daft found that annual inflation in rents was between 9% and 10% across Leinster, Munster, and Connacht-Ulster.

Meanwhile, the research suggests that the average market rent for a two-bedroom apartment nationwide is currently €2,204 per month and is €2,634 in Dublin.

In terms of the number of properties to rent, the survey indicates that availability is improving outside of the capital.

The property website found that at the beginning of August there were just under 2,400 homes available to rent nationwide.

This is an increase of 5% on the same date last year, but the report said this “masks a sharp divide”, with availability in Dublin falling by 18% over the year (to below 1,150 homes).

Professor Ronan Lyons said that the report ‘highlights an important shift in the market’

However, Daft said that across the rest of the country availability rose by 40%.

Despite this, the report notes that “across the country, availability remains well below pre-pandemic norms, when there were typically over 4,300 homes to rent at any one time”.

Ronan Lyons, report author and Trinity College Dublin Economics Professor, said “the second quarter offers a clear read on the impact of the new rent-control system”.

“It suggests that the surge in rents in early 2026 was a one-off reset rather than the start of a new trend,” he said.

“Having risen by a record 4.4% in the first quarter, market rents rose by just 1.4% between March and June. And that adjustment appears to be largely complete in major cities, even if it is still working its way through the rest of the country.”

Speaking on RTÉ’s Morning Ireland, Prof Lyons added: “The increase between March and June was more or less in line with the average over the last 10 years, about 1.5%, but most people don’t change their rents every three months.

“They’re looking every year or two years, and in that case, the more relevant comparison for them is how do things now compare to a year ago or indeed two or three years ago?

“Unfortunately, that picture is less cheery, it’s still a 7.7% increase nationally for open market rents, year on year on average, but if you’re a sitting tenant, you’ve seen a much smaller increase, usually about 2.5% on average.”

On supply, he said the “rebound in listings since March has persisted, but it is in effect merely offsetting the earlier delay rather than adding new supply.

“Over the past 12 months, the number of homes listed to rent was effectively unchanged on the previous year.

“If you think of rent controls not about landlords versus tenants but about those staying in place versus those who have to move, rent controls change that pressure and put more of it on those who are moving.

“The fundamental issue here is supply, that there’s simply not enough homes available for the number of people looking,” he said.

He added that the report “highlights an important shift in the market”.

Additional cost of rental in Dublin at ‘lowest level on record’

“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.

“Rents elsewhere have risen far faster, however – by 90% in Connacht-Ulster and 75% 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.”

Mr Lyons said the number of proposals for new rental accommodation is nothing like the “volume required to solve the problem”.

“In 2018-19, the government at the time introduced Build to Rent proposals and that, plus a favourable international environment, meant there was lots of investment in those homes that came onto the market in 2022 to 2024 in Dublin,” he said.

“At that time, Dublin saw very little rental inflation compared to the rest of the country, including other cities, so we already have the evidence that supply works.

“The problem is, we don’t have the plans or proposals or policies at the moment to repeat that and to repeat it at scale all across the country, and that will take a significant change in policy.”

Mr Lyons said the issue is not just about controlling rents in the properties that are already in the sector, but it is also about getting more properties into the rental sector.

“It’s not an either or, it’s not ‘okay, we need to put all our eggs into the market renting basket and take them out of social renting or of owner occupiers’,” he said.

“As a country, we’re short all of those three kinds of homes, so we need a plan for more market rental as well as for more social rental and more owner-occupied homes.”