This is the largest annual increase in rents ever recorded in the Daft.ie Report, which extends back to 2002. In addition, at €1,111 in the final three months of the year, the average monthly rent nationwide is at a new high, for the third quarter in a row.
In Dublin, the annual rate of inflation in rents during 2016 was 14.5%, the second highest rate on record since 2002. Rents in the capital are now 13.7% higher than their previous peak in early 2008 - or an average of almost €200 a month. In Cork, rents rose by 12% during 2016, down from 18% earlier in the year. Rents in Galway are 10% higher than a year previously, while rents in Limerick have risen 12.5% in the last year. In Waterford city, rents have risen by 10.7% in twelve months, the same as outside the major cities.
There were just under 4,000 properties available to rent nationwide on February 1st. This marks a slight improvement on the same date the previous year, when there were just under 3,600 properties available. However, it remains just one quarter of the level seen five years previously, when there were almost 12,000 properties available to rent nationwide.
The latest figures from the rental market remain very concerning. Not only do rents continue to reach new peaks, rental inflation continues to increase in both Dublin and nationwide. The increase in rents in the final three months of the year in Dublin was 4%, the second fastest three-month increase on record.
While measures to control rental inflation may help sitting tenants, they do little to address the underlying issue of a lack of supply. Indeed, they may hinder supply, by encouraging the exit of existing landlords who had not substantially increased rents in recent years. Addressing construction costs remains the best way of addressing supply shortages and the audit of build costs remains the single most important next step for policymakers, for that reason.
This rise is in keeping with an overall increased interest in the property sector. In January, searches for new homes surged by 125% on the back of the "Help-to-buy" scheme launch.
Year-on-year change in rents, Q4 2016
- Dublin: €1,643, up 14.5%
- Cork: €1,096, up 12.0%
- Galway: €975, up 10.0%
- Limerick: €875, up 12.5%
- Waterford: €745, up 10.7%
- Rest of the country: €783, up 12.5%