Residential Rental Sector Collapses

[HanleyS]

Rents in Ireland fell for the first time since 2004 according to the latest Daft Report,
with rents now 2% below those in January 2008. Year-on-year rents were still 3.7%
up on a year ago. The nationwide fall of 2% masks some regional variation - in
Limerick city and Dublin city centre rents have fallen by almost 3%, whereas in
West Dublin and West Leinster rents rose slightly. The stock of property to rent
has increase from 5000 in May 2007 to almost 12,000 in May 2008. Given the
large increase in the stock of property for rent we should expect further rent
declines over the coming months but as noted above these price developments will
not be uniform across the country.

Falling rents removes a key support from the Irish residential property market which
had been seeing strong increases in rents in 2007, although property prices were
falling. This comes at a time when financing costs are rising which is bad news for buy
to let investors (existing and prospective) and point to further falls in house prices. This
news is bad for both volumes and LTV’s, and therefore credit gradings which will put
more pressure on Irish Banks capital ratios as risk weighted assets increase.

http://www.rte.ie/business/2008/morning ... 520ncb.pdf
http://www.daft.ie/report
http://www.examiner.ie/irishexaminer/pa ... qqqx=1.asp

[Sligoboy]

Rents in Ireland fell for the first time since 2004 according to the latest Daft Report,
with rents now 2% below those in January 2008. Year-on-year rents were still 3.7%
up on a year ago. The nationwide fall of 2% masks some regional variation - in
Limerick city and Dublin city centre rents have fallen by almost 3%, whereas in
West Dublin and West Leinster rents rose slightly. The stock of property to rent
has increase from 5000 in May 2007 to almost 12,000 in May 2008. Given the
large increase in the stock of property for rent we should expect further rent
declines over the coming months but as noted above these price developments will
not be uniform across the country.

http://www.rte.ie/business/2008/morning ... 520ncb.pdf
http://www.daft.ie/report
http://www.examiner.ie/irishexaminer/pa ... qqqx=1.asp

DAft and co simply catching up with what has been known on the ground for quite some time.

[HanleyS]

DAft and co simply catching up with what has been known on the ground for quite some time.

It was predicted. It was obvious and inevitable. Now it's happening.

[DaveM]

A 2% drop, the first in 4 years, hardly constitutes a "collapse" in the rental sector. The title of this thread seems to be a little hysterical.

[bobbysands81]

A 2% fall straight after record all time growth hardly constitutes a collapse!!!

Rental market is still incredibly strong given the supply has gone up 50% in the last year or so as builders ride out the Housing price falls and rent out their units instead of selling them. When they do sell them it will more than likely take a shed load of housing stock off the rental market potentially leading to further rent increases.

[michael1965]

True. If a 2% drop means the "residential rental sector collapses", what kind of hysteria can we expect if that doubles say to a 4% drop?

[HanleyS]

True. If a 2% drop means the "residential rental sector collapses", what kind of hysteria can we expect if that doubles say to a 4% drop?

The beginning of the collapse then? Would that be more to your liking?

[Aindriu]

I don't know where DAFT got their 2% from. I have been monitoring rental prices for a few weeks and they have dropped about 12 - 17% in reality.

A good thing too. For far too long renters in the private sector have been screwed to pay most of the mortgage of a specuvestor with little or no security of tenure to show for it.

[Maximus]

Rents in Ireland fell for the first time since 2004 according to the latest Daft Report,
with rents now 2% below those in January 2008. Year-on-year rents were still 3.7%
up on a year ago. The nationwide fall of 2% masks some regional variation - in
Limerick city and Dublin city centre rents have fallen by almost 3%, whereas in
West Dublin and West Leinster rents rose slightly. The stock of property to rent
has increase from 5000 in May 2007 to almost 12,000 in May 2008. Given the
large increase in the stock of property for rent we should expect further rent
declines over the coming months but as noted above these price developments will
not be uniform across the country.

Falling rents removes a key support from the Irish residential property market which
had been seeing strong increases in rents in 2007, although property prices were
falling. This comes at a time when financing costs are rising which is bad news for buy
to let investors (existing and prospective) and point to further falls in house prices. This
news is bad for both volumes and LTV’s, and therefore credit gradings which will put
more pressure on Irish Banks capital ratios as risk weighted assets increase.

http://www.rte.ie/business/2008/morning ... 520ncb.pdf
http://www.daft.ie/report
http://www.examiner.ie/irishexaminer/pa ... qqqx=1.asp

2% fall in rents a !collapse".... why didnt you just title the thread "oh my God the Sky is Falling, The Sky is Falling."

Would you get a grip.

[HanleyS]

a) DAFT figures are not adjusted for inflation so the real drop is more pronounced.
b) DAFT figures are asking prices and not market prices. The market leads pricing.
c) As the second quote in my first post states, the rental sector has been supporting the property market as the For Sale sector collapsed. That support has now been removed.