The pace of rent increases in Ireland slowed sharply during the second quarter of the year, although rental costs remain substantially higher than a year ago and housing supply continues to fall short of demand, according to a new report from property website Daft.
Market rents increased by 1.4% between March and June, a significant decline from the record 4.4% rise recorded during the first quarter. Daft said the latest quarterly increase was slightly below the average rise of about 1.5% recorded over the past decade.
Despite the slowdown, rental inflation remained particularly high in several cities outside Dublin. Rents in Galway city were 13% higher year on year in the second quarter, while Cork recorded an increase of 12% and Limerick rose 11%.
Waterford recorded a smaller annual increase of 5.5%, broadly similar to Dublin, where market rents were 6.5% higher in June than a year earlier.
Outside the major cities, rents increased between 9% and 10% across Leinster, Munster and Connacht-Ulster.
The average market rent for a two-bedroom apartment reached €2,204 a month nationwide, while the figure in Dublin stood at €2,634.
Daft economist Ronan Lyons said the recent slowdown suggested the sharp increase recorded earlier in the year had largely worked its way through major cities. However, he warned that annual rental inflation remained a concern.
Open-market rents were still 7.7% higher nationally than a year earlier, while sitting tenants generally experienced much smaller increases of about 2.5%, he said.
Rental availability has improved slightly outside Dublin, with almost 2,400 homes available nationwide at the beginning of August. That represented a 5% increase from the same point last year.
However, the national figure concealed a significant regional difference. The number of homes available to rent in Dublin fell 18% over the year to fewer than 1,150 properties.
Lyons said the recent increase in listings was largely offsetting an earlier decline rather than creating additional supply. Over the previous 12 months, the number of homes listed for rent was broadly unchanged.
He said the shortage of rental properties was a national problem and argued that increasing supply was essential to easing pressure on tenants.
The report also found that Dublin’s rent premium compared with the rest of Ireland had fallen to its lowest level on record. Although Dublin rents remain about 25% above pre-Covid levels, rents have risen much faster elsewhere, increasing 90% in Connacht-Ulster and 75% in Munster over six years.
Lyons said Ireland needed policies capable of delivering more rental homes across the country, alongside additional social and owner-occupied housing.
