Slower Rate of Growth in Private Sector Rents

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The latest rent index shows that rents continued to increase in Q1, 2016, when compared with Q 4, 2015, although the rate of growth slowed in most sectors in the first quarter. At a national level, monthly rent levels rose in Q1, 2016, up by 0.5%, when compared with Q4, 2015. This compared to a growth rate of 1.6% in Q4, 2015. Monthly rents for houses were marginally lower, by 0.3%, while rents for apartments were 1.8% higher than in Q4, 2015.

Rents in Dublin grew by 0.2% in Q1, 2016 when compared with Q4, 2015. While rents for houses in Dublin increased by 0.6%, rents for Dublin apartments rose by 0.4%. For properties outside Dublin rents in Q1, 2016, when compared with Q4, 2015 were up by 0.9%. Rents for houses outside Dublin recorded a quarterly decline of 0.5%, while apartment rents outside Dublin increased by 4.2%.

This data comes from the latest Residential Tenancies Board (RTB) Quarterly Rent Index which is compiled by the Economic and Social Research Institute (ESRI) for the Board. It is the most accurate and authoritative rent report of its kind on the private accommodation sector in Ireland. This is because it is based on 22,753 new tenancies which commenced in January, February and March this year, and on the actual rents being paid, according to the RTB’s records, as distinct from the asking or advertised rent.

Moving from the quarter-on-quarter picture to the level of annualised rent changes, rents for the country as a whole were 8.6% higher in the first three months of this year, compared with the first quarter (Q1) of 2015. Rents for houses were 7.8% higher, while apartment rents were 9.8% higher than in Q1, 2015. Annual growth in the Dublin market was also strong, up by 8.7% overall, with Dublin house rents up 8.4% and Dublin apartment rents up 8.1% between Q1 2015 and Q1, 2016.

Annual growth in rents for the market outside Dublin showed broadly similar annual increases, recording growth of 8.8% when compared to Q1, 2015. The performance differed by property type, with monthly rent for houses outside Dublin increasing by 7.6%, while apartments outside Dublin experienced an increase of 11.3%.

In monetary terms, the standardised rent for private sector accommodation across the whole country in Q1, 2016, was €922 – up from €849 in Q1, 2015. The rent for apartments nationally was €972 (compared to €885 a year earlier), and for a house it was €900 (€835 a year earlier). In Dublin, the rent in Q1, 2016, was €1,454 for a house and €1,306 for an apartment. A year earlier, Q1, 2015, the rent for a house in Dublin was €1,342, and for an apartment it was €1,208. Outside Dublin, the standardised rent in Q1, 2016, was €718, with houses averaging €731 and apartments €711. A year earlier, these figures stood at €660, €679 and €639 respectively.

The Rent Index shows that, nationally, rents peaked in Q4, 2007 before declining by 25.7% to their trough in Q1, 2012. By Q1, 2016 rents nationally were 9% lower than their peak. While the peak-to-trough in the Dublin market was similar to that experienced nationally, the strength of the recovery in Dublin means that rents are now 0.2% higher than their previous peak in Q4, 2007. In contrast, the market outside Dublin has experienced more subdued growth and rental levels are now 13.9% off their peak levels.

Commenting on the latest Rent Index findings, the Director of the RTB, Ms. Rosalind Carroll, said, “The trend in recent indices has been upwards, and that growth continued in Q1, 2016 with rents nationally now €73 a month higher than the same period in 2015.  However, it appears that the rate of growth is slowing, with rents increasing by 0.5% between Q4, 2015 and Q1, 2016, compared to 1.6% for the previous quarter. While it is too early to make any real deductions from this, this is the second quarter in succession that we have seen growth slow”.

Ms Carroll said the RTB now has a total of 324,000 tenancies registered, representing 172,000 landlords and 705,000 occupants. “The ongoing increases in the level of rents across the country are being driven primarily by a lack of supply. The trend in new tenancy registrations also reflects this. Annual tenancy registrations peaked in 2013, with nearly 112,000 tenancies registered in that year, but that has dipped consecutively in 2014 and 2015, while our overall numbers of registered tenancies have increased. This suggests that tenants are staying longer in their properties”.

The RTB website www.rtb.ie (click on “rent index”) also contains an Average Rent Dataset which enables people to check the average rent being paid for five different categories of dwelling types throughout the country, in both urban and rural areas. This means people can check what is the actual rent being paid for, say, a semi-detached house or a two-bed apartment in their neighbourhood, or in other parts of the country.

All landlords are legally obliged to register tenancies with the RTB and the number of new registrations with the RTB in Q1, 2016, was 22,753.

The RTB Index is of assistance for a range of Government purposes, including housing policy generally, and informing the Department of Social Protection’s Rent Supplement scheme. It is also an important reference document in landlord/tenant disputes on rent.  It was developed in consultation and co-operation with landlord representative groups such as the Irish Property Owners Association, irishlandlord.com, the Institute of Professional Auctioneers and Valuers, the Society of Chartered Surveyors of Ireland, and tenant representative groups such as Threshold and USI (Union of Students in Ireland).

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