The Daft.ie Rental Report

Supply of
Ronan Lyons
Economist at Trinity College Dublin and author
of the Daft.ie Report.
homes to rent
must be a top priority for the
next Government
Three months ago,
the commentary to
the previous Rental
Report highlighted the
importance of looking at
quantities – the number
of homes available to
rent – rather than prices.
years. That trend has seen rents in Dublin 2 – the
archetypal urban market – grow far faster than
those in Leitrim, one of the cheapest rural markets.
The figure below shows how average rents in
Dublin 2 compare to rents in Leitrim since 2006.
Ten years ago, in 2006, rents in Dublin 2 were
roughly 2.8 times those in Leitrim and by 2010, that
ratio had changed very little. Since then, though,
Dublin 2 rents have grown so that they are now
close to 3.7 times those in Leitrim.
Rents in Dublin 2, relative to Leitrim
3.7
3.4
This was in the context of calls for controls on rent
increases. Blunt attempts to limit increases in rents
would do nothing to address the lack of homes to
rent and – like other price controls – potentially
make the problem worse, rather than better, by
limiting investment in new homes.
How do things look three months on? With the next
election just a couple of weeks away, what are the
key messages the next Government should take
away about the rented sector? And are the actions
it needs to take?
As ever, the initial focus will be on rents and how
they’ve changed. There, a clear message emerges
over the last four years – the ‘urban premium’
has grown and grown sharply. While Dublin rent
inflation has been lower than that in the rest of the
country for much of the last year, this marks only a
small blip in a longer-term trend over the last five
3.1
2.8
2.5
Q1
2006
Q4
2007
Q3
2009
Q2
2011
Q1
2013
What does this growing urban premium mean?
In most developed countries, it is politically
uncontroversial to say that cities are where the bulk
of jobs are created – and thus where population
growth is centred. Ireland was, temporarily, an
exception to this rule, as loose credit meant there
were jobs and homes in towns, big and small.
The end of the bubble, though, has refocused Irish
people – young people in particular – on what kind
of locations offer a good ‘labour market amenity’,
i.e. jobs. The bigger the city, the better the labour
market amenity and many young Irish people
have decided that even Ireland’s biggest city is not
big enough and gone abroad in search of safer
employment prospects.
Q4
2014
The Daft.ie Rental Report – 2015 in Review | 2