The RTB/ESRI Report produced by the Residential Tenancies Board (RTB) and the Economic and Social Research Institute (ESRI) provides rental indicators (the Rent Index) generated to track price developments in the Irish market.
According to the research, despite the increase in housing completions recently, the level of supply remains significantly below the level of structural demand.
The year-on-year growth rate of the national standardised average rent increased to 8.2 per cent in Q3 2019. The quarter-on-quarter growth of rent prices also increased to 3.3 per cent in Q3 2019, indicating a further strengthening in the quarterly inflation.
The RTB confirms that the standardised average national rent for houses stood at €1,221 in Q3 2019 which was an increase of €94 compared to Q3 2018. The standardised average rent for apartments also increased over this period, up by €87 to €1,275 in Q3 2019. On a quarterly basis, the standardised national rent for both houses and apartments increased compared to Q2 2019. The growth rate for houses increased again to 4.7 per cent in Q3 2019, up 1.1 per cent from the previous quarter. The quarter-on-quarter growth rate for apartments declined marginally from the previous quarter to 1.8 per cent. On a year-on-year basis, rents for houses increased by 8.3 per cent in Q3 2019, 1 percentage point higher than the annual growth rate in Q2 2019. Apartment rent prices increased by 7.4 per cent in Q3 2019 over the same period which represents an increase of 1.7 percentage points relative to Q2 2019.
Most of the renters concentrate in the large population centres near jobs, education and amenities, price pressures are greatest in these areas. As Dublin accounts for the largest share of economic activity and employment, in Q3 2019, it accounted for just under 2 in every 5 tenancies that were registered with the RTB. With just under 9 per cent of tenancies agreed at less than €1,000 per month compared to 62 per cent elsewhere, this shows acute price pressures of the rental market in the capital. The standardised average rent for Dublin stood at €1,762, up from €1,652 in the same quarter the previous year. This represents a 6.6 per cent annual increase in rent in the capital.
The counties outside the GDA show the standardised average rent stood at €903 in Q3 2019, up from €827 the previous year. The Index for the rest of the country stood at 117 in Q3 2019, an increase of 5 index points in comparison to Q2 2019. The quarter-on-quarter growth rate for outside the GDA increased from 2.2 per cent in Q2 2019 to 5.1 per cent in Q3 2019. On a year-on-year basis, rents outside the GDA were up by 9.2 per cent.
As the housing market, including the PRS, is influenced by the state of the economy, interest rates, real income, changes in population size and investor incentives, house prices and rents are largely determined by the available supply. Ongoing supply shortages are a factor in continued rent price growth despite the construction industry seeing a rapid recovery.
A significant increase in the number of properties available for sale and rent, is necessary, to temper the rapid and continued growth in rent prices.