Report from Daft.ie: Average rents hit record level

[ballot stuffer]

The amateur speculators, especially those who bought in the last few years are more prone to interest rate rises. These people have little wiggle room with regards rental yields. Indeed, many people are loosing money each month as they are more interested in capital appreciation of the property than rental yields.

Rental yields are well below the healthy international average which suggests many people are more interested in capital appreciation.


With the cloud of banking disorder at the moment and the tightening of credit which will have to follow and possible interest rate rises it is hard to see strong capital gains in property near to medium term future.

The two big questions that face the housing market in this country are:

How long will loss making buy to lets hang on in the face of flat or real world drops in property prices?

What will happen to all the buy to rent properties that are running at a loss?

[bello]

From Ireland.com:

• The average rent paid for accommodation in Ireland has hit an all-time high, according property website Daft.ie.
  
  The latest Daft.ie rental report found the average rate now stands at €1,372, just over €100 or 9 per cent more than this time last year.
  
  Overall, rental inflation looks to have peaked - and more than likely, so have rents, as the bounds of tenants' ability to pay have been reached
  Daft.ie economist Ronan Lyons But the report also indicates the rate of growth has slowed somewhat, with inflation dropping from 11.9 per cent in the first quarter of 2007 to 9 per cent in the last three months.
  
  In most areas in Dublin, rents now are between 8 per cent and 12 per cent higher now than 12 months ago. However, rents in Dublin's commuter towns have remained static - at just over €1,100 on average - or fallen fractionally compared to this time last year.
  
  While larger properties, including three- and four-bedroom properties have seen their rents go up, rents have fallen for smaller properties in Dublin's commuter towns, especially one-bedroom properties, Daft.ie said.
  
  The report suggests that rental inflation in other cities has also fallen, most noticeably in Limerick, where inflation has fallen from 12.3 per cent earlier this year to 7.3 per cent in July.

An interesting quote further on in the article states, "Overall, rental inflation looks to have peaked - and more than likely, so have rents, as the bounds of tenants' ability to pay have been reached." Well, that seems like good news. Indeed, it seems counter-intuitive for rent to be increasing at the rate it is, while house prices seem to be creeping downwards. From my own experience, the rent where I currently live is being raised by 33% (needless to say, the lease shall not be renewed), and I have heard of others being hit with similar increases. Has anyone else here, particularly outside Dublin, experienced sharp increases or decreases in rent of late?

Is it all about high rent alone on that web in questions?
That web is also full of coy boy estate agent aswell not mentioned the discriminations in obtaining a house from those estate agent, they will even turn themself to semi God.

[Bray Head]

The rental rates are artificial anyway. The development next to mine has dozens of empty proerties - all brand new builds. None of them are advertised for sale. I suspect that they have been left empty to create a shortage in supply thus enabling the landlords to increase rents.

Complete nonsense. Do you really think that a multipliciy of landlords are so coordinated as to keep houses off the market and keep up prices? They're empty because:

1) The owners are still deluded into thinking that the point of buying an asset is for its capital appreciation, not its revenue streams. They're in for a shock.

2) Tax incentives, nimbyism and bad planning have led to the construction of houses where it's not terribly desireable to live.

What we're seeing is a sensible realignment of the rental market and the purchase market. Expect prices to fall a lot more than rents will increase though.

[kerrynorth]

The rental rates are artificial anyway. The development next to mine has dozens of empty proerties - all brand new builds. None of them are advertised for sale. I suspect that they have been left empty to create a shortage in supply thus enabling the landlords to increase rents.

Complete nonsense. Do you really think that a multipliciy of landlords are so coordinated as to keep houses off the market and keep up prices? They're empty because:

1) The owners are still deluded into thinking that the point of buying an asset is for its capital appreciation, not its revenue streams. They're in for a shock.

2) Tax incentives, nimbyism and bad planning have led to the construction of houses where it's not terribly desireable to live.

What we're seeing is a sensible realignment of the rental market and the purchase market. Expect prices to fall a lot more than rents will increase though.

Both your points are correct BH plus houses sell quicker with vacant possession: buyers are more reluctant to bid for properties that have sitting tenants, unless they are investors.

[MookieBaylock]

i would tend to agree with the view that landlords are panicking and putting up rents to cover their loans - looks to me like the whole house of cards will tumble early next year.. the only hope is that the Euro Bank actually REDUCES interest rates to save the stock markets - that's a long shot.

Even though I am a homeowner, I think a property crash would be a good thing for Ireland. It didn't damage Holland in the 70's or Finland in the 80's and it would give the next generation a chance (how people afford to attend college in Dublin these days is beyond me).

Let's face it 90pc of owners have one home so a crash won't effect them - I need somewhere to live and if property falls and I decide to move its the same difference.

If a Dublin house is 600,000 and a Cork one 400,000 it will most likely become 300,000 vs. 200,000 - yes i would lose equity but my house is at an inflated price anyway so who cares?

[ibis]

i would tend to agree with the view that landlords are panicking and putting up rents to cover their loans - looks to me like the whole house of cards will tumble early next year.. the only hope is that the Euro Bank actually REDUCES interest rates to save the stock markets - that's a long shot.

Even though I am a homeowner, I think a property crash would be a good thing for Ireland. It didn't damage Holland in the 70's or Finland in the 80's and it would give the next generation a chance (how people afford to attend college in Dublin these days is beyond me).

Let's face it 90pc of owners have one home so a crash won't effect them - I need somewhere to live and if property falls and I decide to move its the same difference.

If a Dublin house is 600,000 and a Cork one 400,000 it will most likely become 300,000 vs. 200,000 - yes i would lose equity but my house is at an inflated price anyway so who cares?

This keeps getting said, and the answer is that it depends on whether the price falls below what you bought it for (plus any equity you've taken out). If you bought for €600,000, and the price drops to €300,000, you'll still owe the bank €300,000 after you've sold.

All the bank has done has been to lend you the €600,000 to buy the house. Whatever you borrowed from them is what you owe them, no matter what the value of your house may become.

[General_Hoche]

Good job Michael Davitt fought against the Brits to achieve the 3 Fs - Fair Rent, Fixity of Tenure and Freedom of Sale. Just so our own elected government could reverse the lot of them and keep us manacled by debt and uncertainty. Sold out to builders, developers, investors and all the other worshippers of money [paper made from dead trees, lest we forget]