Research reveals private rented sector in Ireland is buoyant
The private rented sector has expanded rapidly in Ireland with 24.5% of all households in Dublin now tenanted, a rise of over 60% since 2011, a new analysis shows.
There are 328,700 now living in rented homes in the Irish capital, up 61.3% since the first quarter of 2011, according to an analysis of data from the Central Statistics Office (CSO) by Savills Ireland.
It also shows that the stock of housing units in the private rented sector has expanded by 43,120 in Dublin and by 24,128 nationally, which Savills points out contradicts claims by some estate agents and business associations that landlords are fleeing the market and the sector is contracting.
‘With rents back to boom-time levels, income yields on residential property are much more attractive than the returns that are available to investors who leave their money in the bank or buy a bond,’ said Savills director of research John McCartney.
‘On top of this, investors are generating wealth from capital appreciation so it’s a no-brainer for people with the cash,’ he added.
The analysis report points out that while the stock of rental properties in Dublin has risen by 54% since the first quarter of 2011 and this expansion has not been sufficient to keep pace with the growth in demand.
‘House price inflation, sluggish wage growth, weakened household balance sheets and tight mortgage lending have conspired to drive people who would otherwise have been owner-occupiers into the rented market. At the same time social housing tenants are increasingly being housed in private rented accommodation. This has driven a huge increase in rental demand,’ McCartney pointed out.
For the first time Savills’ research reveals the vacancy rate for private rented housing in Ireland. This peaked at over 10% in the middle of 2009, but has now fallen to below 1.5% both in Dublin and outside the capital.
Savills has calculated the long term mathematical relationship between vacancy rates and rental growth. This is then used to forecast residential rents into the future. Based on three alternative vacancy rate scenarios the model predicts compound rental growth of 22% to 26% between the third quarter of 2016 and the end of 2018.