Report from Daft.ie: Average rents hit record level

[TheBear]

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?

[meriwether]

Whats the economics of rent, vis a vis house prices, and interest rates?

I would imagine interest rates rising would increase rent rates, especially if the mortgage is being repaid by said rent rates.

House prices?
Are people rushing to sell now, which means getting rid of tenants, which means more tenants and less houses being rented?

[ibis]

Whats the economics of rent, vis a vis house prices, and interest rates?

I would imagine interest rates rising would increase rent rates, especially if the mortgage is being repaid by said rent rates.

House prices?
Are people rushing to sell now, which means getting rid of tenants, which means more tenants and less houses being rented?

Certainly part of it is that if people are waiting to buy, they're effectively 'queuing' in rented accommodation, thus driving up rents. However, I would also imagine that average rents tend to relate to average mortgage repayments as well, both for the reason you give and the comparison being available to renters.

[Rebel CNC]

It's strange -in Cork rents have gone up but plenty of rental property remains unoccupied.

[kerrynorth]

Whats the economics of rent, vis a vis house prices, and interest rates?

I would imagine interest rates rising would increase rent rates, especially if the mortgage is being repaid by said rent rates.

House prices?
Are people rushing to sell now, which means getting rid of tenants, which means more tenants and less houses being rented?

Certainly part of it is that if people are waiting to buy, they're effectively 'queuing' in rented accommodation, thus driving up rents. However, I would also imagine that average rents tend to relate to average mortgage repayments as well, both for the reason you give and the comparison being available to renters.

There is only a indirect relationship between rents and mortgage costs. Rents are set by supply and demand, if there strong rental returns then more supply should follow. However mortgage costs are rising as interest rates which has absolutely no relationship with rents. The fact that rents are rising has nothing to do with rising mortgage costs. I am sure you find in the daft survey parts of the country due to local conditions where rents are falling/static although mortgage costs are rising at the exact same pace as in Dublin. However, the parallel universe that Irish property operates in could be producing a situation where investors are getting out of the rental market due to the widening negative gap between rents and repayments which reduces supply and leads to further rent increases!

[TheBear]

It's strange -in Cork rents have gone up but plenty of rental property remains unoccupied.

Maybe people's standards/expectations have increased. As renting becomes more normal in society, rather than just being for students living away from home and such like, people expect more of rental accommodation than a room in a house with a hob and a toilet in the corner.

[Aindriu]

It's strange -in Cork rents have gone up but plenty of rental property remains unoccupied.

Maybe people's standards/expectations have increased. As renting becomes more normal in society, rather than just being for students living away from home and such like, people expect more of rental accommodation than a room in a house with a hob and a toilet in the corner.

Too bloody right we do! Many people have no choice but to rent as the cost of property here has become feckin ridiculous!

[zakalwe]

yet hanlys still thinks that renting is a better bet than owning and paying a mortgage.

[Akrasia]

This is an inevitable and predictable part of a house market crash.

People are holding off buying, and renting for longer, but investors are putting houses up for sale and removing them from the rental market in an attempt to get out before the crash or minimise losses.

It will start to reverse when investers realise that they won't be able to sell the houses without making a huge loss and accept that they need to rent out their houses to help service their mortgage, so there will be a sudden glut of rental properties available

[Aindriu]

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.