Irish rent prices slumped in April as Covid-19 hit the market
Rents fell in April but were still rising in many parts before coronavirus hit in March.
Nationally rents fell by 2.1% on average in April, compared to March, according to the latest Rental Report by Daft.ie, reflecting the economic fallout from the Covid-19 pandemic. This is the largest monthly decrease in over 11 years.
With increases throughout much of the last 12 months, rents in the first quarter of 2020 were 3.8% higher than a year previously, although this does mark the lowest rate of inflation since late 2012. The average monthly rent nationwide stood at €1,418 in the first quarter of 2020, €676 per month higher than the low seen in late 2011.
The early 2020 trends have been broadly similar across the country, with rents rising by close to 4% in many parts of the country in the year to March before falling up to 2% in April. In Dublin, rents fell by 2.5% in April, compared to March, while in the four other major cities, they fell by an average of 2%. In Leinster, outside Dublin, rents fell by 1.5% between March and April, while in Munster and Connacht-Ulster, they fell by 1.8% and 1.4% respectively.
The number of homes available to rent nationwide on May 1 was almost 40% higher than on the same date a year earlier, with almost 3,800 homes on the market, compared to 2,700 in May 2019. This increase in availability comes even as the number of rental ads being posted dropped sharply. Over the course of April 2020, there were almost 15% fewer homes advertised than during April 2019. Dublin bucks this trend, with a small increase in the number of listings during the month of April.
Commenting on the report, Ronan Lyons, economist at Trinity College Dublin and author of the Daft Report, said: “Before Covid-19 stopped the economy in its tracks, it seemed as though things were finally beginning to improve for Ireland’s rental sector. After a decade where effectively no new rental homes were built, the situation had improved in recent quarters.
"Figures in this report show that over 35,000 new rental homes were in the pipeline when Covid-19 shut down the construction sector. Given that the pandemic is unlikely to change any of the long-term fundamentals driving underlying housing need, there is a danger that while its immediate impact might be to lower rents, its longer term effect could be to worsen the shortage.”
Research provided to Daft.ie by LIV Consult on the Irish Build to Rent (BTR) market indicates that Ireland has a pipeline of just over 50,000 BTR units. This is up from 26,000 since Q2 2019. Whilst the majority is focused in Dublin (over 47,000), Cork is seeing signs of activity with a pipeline of over 2,600 units. Whilst this pipeline includes projects at all stages, including Pre Planning, Planning Submitted, Planning Approved and Under Construction, the overall numbers are positive. Presently, 4,000 units are under construction, with a further 15,000+ units with approved planning permission.
Iain Murray, Director BTR Consultancy Europe, LIV Consult, commented on the new developments planned for Dublin and Cork by saying: “The level of growth in this asset class can be attributed to the underlying metrics of the housing market in Ireland. With a significant disparity between the supply and demand for housing, Investors see BTR as a positive solution to increasing supply. Many of these developments in the pipeline are utilising the specific Apartment Design Standards for BTR launched in 2018 to support the delivery of purpose-built BTR. In fact, 2020 is expected to see the opening of the first BTR schemes designed in accordance with this guidance, which clearly shows the infancy of the Irish BTR market.”