Irish Rental Crisis Inflamed by Government Division
For some time, investors have been calling for government intervention to slow rising rents in Ireland and bring much needed relief to the country’s growing housing crisis. However, the situation has remained the same despite promises to introduce measures, resulting in significantly reduced appetite for Irish property.
The Environment Minister, Alan Kelly promised some form of curb on rising rents as long ago as last March at the Labour Party national conference in Killarney. Eight months later that promise remains unfulfilled leading to speculation that uncertainty in Ireland’s housing market is set to continue.
Mr Kelly insists that ‘rent certainty’ will be brought in as a short-term measure and the minister who has notably always avoided the term ‘rent controls’, argues that it " has to happen ". However, he is unable to say how this scheme might work and without these details, others struggle to assess this unknown quantity.
Experts are now linking the rise in rents and the drop-off of investment in Ireland’s rental market to uncertainty over what cooling measures the government will implement, suggesting that property investors are taking a back seat and a ‘wait and see’ attitude. It is widely felt that the very existence of the promise of ‘rent certainty’ has fed instability in an already disturbed rental property market.
Rents in Dublin have climbed 8.5% over the last 12 months compared with a 15% jump in the preceding 12 months and just outside Dublin, an 8.7% rise in rental costs has been recorded over the last year. In terms of cash values, the national average rent was €934 between April and June this year compared with €860 for the same quarter in 2015. In Dublin, the average price renters are paying is €1,368 while in Cork the average is €889 and €818 in Galway, according to Irish property website Daft.ie.
Rents are being driven higher by the supply and demand dynamic. At the beginning of August there were just 4,600 units available for rent compared with 6,800 on the same day a year earlier. On August 1 st 2009 there were around 23,000 properties to rent across the Republic. However, there are less than 2,000 properties available for rent in Dublin today.
Ireland has a huge rental market with more than 700,000 people living in leased housing and apartments. Identified at the beginning of the year as an investment hotspot for property investors, Dublin’s rental market has seen supply issues constraining growth in recent months.
The additional uncertainty introduced by the government’s lack of action on rent increases has led to a dip in sentiment for Irish property among investors. Overseas buyers in the country have the additional issue of a weak euro that is currently diverting significant wealth to stronger dollar and sterling markets.
Unless the Irish government take a firm stance on the issue of rising rents and directly address the rising issue of affordability among the renting population, the rental market is likely to remain constricted. Lack of supply in an uncertain economic framework is not a reliable investment instrument and is not likely to appeal to a savvy investor’s risk appetite at the current time.
Article by +Roxanne James on behalf of Propertyshowrooms.com
