Q2 2019 Rent Index

RTB/ESRI Q2 2019 Rent Index

The RTB/ESRI Report produced by the Residential Tenancies Board (RTB) and the Economic and Social Research Institute (ESRI) provides rental indicators (the Rent Index) generated to track price developments in the Irish market.

According to the research, it is likely that affordability issues in the housing market are resulting in an increasing number of people moving into the rental sector, exerting upward pressure on rents.

With the economy operating close to full employment, this is likely aggravating affordability while the risks from the international environment are increasing due to continued Brexit uncertainty. If a no-deal Brexit occurs in late 2019, the Irish economy could contract in 2020.

The year-on-year growth rate of the national standardised average rent slowed marginally to 7.0 per cent in Q2 2019. The quarter-on-quarter growth of rent prices increased to 3.0 per cent in Q2 2019, indicating a strengthening in the quarterly inflation.

The RTB confirms that the standardised average national rent for houses stood at €1,164 in Q2 2019 which was an increase of €79 compared to Q2 2018. The standardised average rent for apartments also increased over this period, up by €71 to €1,252 in Q2 2019. On a quarterly basis, the standardised national rent for both houses and apartments increased compared to Q1 2019. The growth rate for houses increased to 3.6 per cent in Q2 2019, up from 1.1 per cent in the previous quarter. The quarter-on-quarter growth rate for apartments remained the same as the previous quarter at 2.1 per cent. On a year-on-year basis, rents for houses increased by 7.3 per cent in Q2 2019, 0.1 percentage points lower than the annual growth rate in Q1 2019. Apartment rent prices increased by 6.0 per cent in Q2 2019 over the same period which represents a decrease of 1.8 percentage points relative to Q1 2019.

Most of the renters concentrate in the large population centres near jobs, education and amenities, price pressures are greatest in these areas. As Dublin accounts for the largest share of economic activity and employment, in Q2 2019, it accounted for more than 2 in every 5 tenancies that were registered with the RTB.  The standardised average rent for Dublin stood at €1,713, up from €1,599 in the same quarter the previous year. This represents a 7.1 per cent annual increase in rent in the capital.

The counties outside the GDA show the standardised average rent stood at €861 in Q2 2019, up from €799 the previous year. The Index for the rest of the country stood at 112 in Q2 2019, an increase of 3 index points in comparison to Q1 2019. The quarter-on-quarter growth rate for outside the GDA was 2.2 per cent in Q2 2019. On a year-on-year basis, rents outside the GDA were up by 7.7 per cent.

Research commissioned by the Residential Tenancies Board (RTB) shows that Rent Pressure Zones (RPZs) have only had a moderating effect on the sector.  With 65% of tenancies in Rent Pressure Zones the ESRI research indicates that price inflation in RPZs has fallen from just over 9% for the seven quarters before the regulations to just under 6.4% in the seven quarters since the introduction of the legislation in December 2016. In the non-RPZ areas, the average rent growth before and after the policy was virtually the same, with only a 0.24% decline.

As the housing market, including the PRS, is influenced by the state of the economy, interest rates, real income, changes in population size and investor incentives, house prices and rents are largely determined by the available supply.  Ongoing supply shortages are a factor in continued rent price growth despite the construction industry seeing a rapid recovery.

A significant increase in the number of properties available for sale and rent, is necessary, to temper the rapid and continued growth in rent prices.

RTB/ESRI Rent Index

RTB/ESRI Q1 2019 Rent Index

The recorded annual growth in the standardised average rent increased to 8.3 per cent nationally in the period to Q1 2019, marking the highest rate of annual rent price inflation since Q2 2016. Despite Q4 2018 marking a notable fall in rent prices during the quarter, the first quarter of 2019 once again marked a rise in rent prices of 2.1 per cent in Q1.

Standardised average national rent for both houses and apartments increased in the year to Q1 2019 as 19 new areas come under Rent Pressure Zone legislation. Average national rents for houses stood at €1,129 in the first quarter of this year, an increase of €85 on the previous year, while average rents for apartments stood at €1,225, an increase of €90. The standardised national rent for both houses and apartments also increased on a quarterly basis, from Q4 2018.

Although the index saw an overall dip in Q4 2018, an unprecedented trend in more recent times, the index increased again in Q1 2019. With the RTB attributing the falloff in the last quarter to seasonality, it also notes a marked increase in the number of tenancies registered in Q1 2019, increasing from 17,830 registered in Q4 2018, to 21,004.

Looking more closely at the split of new and renewal tenancies and how the rent increases for both affect the overall standardised national average, with only 18 per cent of the tenancies registered in the first quarter being renewals. The annual growth rate of standardised average rent was higher for new tenancies (described as “unsurprising” due to the restrictions in place for ‘Part IV’ renewal tenancies). The standardised national rent for new tenancies increased by 8.7 per cent in Q1 while part IV renewals increased by just 6.7 per cent in comparison.

The concentration of the rental market in Dublin is apparent with two out of five of total new tenancies registered in the capital in 2019.

Along with the concentration of tenancies apparent in the capital city, Dublin also represents an area of corresponding price pressure, as presumably higher demand is inclined to push prices up. Just over 11 per cent of agreed tenancies in Dublin were for under €1,000, compared to over 70 per cent under that level elsewhere. Meanwhile, over 55 per cent of tenancies in Dublin had their rents set at over €1,500, compared to just over 5 per cent in other areas.

Albeit that the trend of rising rent prices returned in the first quarter of 2019, on a positive note a clear trend has emerged of longer-term tenancies with almost 30 per cent now for periods longer than 12 months compared to just over 20 per cent in Q1 2014.

RTB/ESRI Rent Index

RTB/ESRI Q4 2018 Rent Index

The final quarter of 2018 marked a notable, quarter-on-quarter fall in the national standardised average rent, according to the RTB Q4 2018 Rent Index, published in association with the ESRI. National standardised average rent fell in the quarter by 0.3 per cent, marking the first quarter since Q1 2017 that the standardised average rent has fallen relative to the previous quarter. Though in the full year period to the end of 2018, standardised national average rents increased by 6.9 per cent, a slightly slower pace than the 8.6 per cent annual growth rate recorded in the previous quarter.

There were 17,830 tenancies registered in the fourth quarter. Standardised average rent for new tenancies during Q4 was €1,237 while for existing tenancies it was at €987.

Disaggregating houses and apartment standardised average rents across the country in Q4 2018 finds that average rent for houses was €1,136 per month, up from €1,066 in Q4 2017. For apartments the average rent was €1,241 in Q4 2018, up from €1,158 the previous year.

On a quarter-on-quarter basis, the growth rate of rental prices in Q4 2018 fell to -1.1 per cent, down from 3.4 per cent in Q3 2018. This marks the first time since Q4 2017 that house rents have fallen on a quarterly basis. The quarter-on-quarter growth rate for apartments decreased in Q4 2018 when compared to Q3 2018 to stand at 0.4 per cent.

The highest standardised average monthly rent in the country for the fourth quarter on a county-by-county basis was recorded in Dublin at €1,650, while the lowest was in Leitrim at €517. In Q4 2018, Dublin accounted for nearly 2 in every 5 tenancies registered with the RTB.

As for other cities across Ireland, outside of the capital, the second highest standardised average rents in Q4 2018 were in Cork City – €1,095 per month. The third highest, Galway City, standardised average rents stood at €1,064 for Q4 2018, and the standardised average rent in Limerick City and Waterford City for Q4 2018 stood at €929 and €682 respectively.

While the data presented for Q4 2018 shows that, nationally, rents moderated somewhat during the quarter, the results of this latest Rent Index from the RTB resulted in the Local Electoral areas of Navan and Limerick City East being designated as the latest Rent Pressure Zones (RPZs) in Ireland.

RTB/ESRI Rent Index

RTB/ESRI Q3 2018 Rent Index

Strong domestic economic activity, rising wages and increased inward migration contributed to rising pressure in the Irish rental market in the third quarter of 2018. The Residential Tenancies Board (RTB) rent index shows that rents grew nationally by 7.5 per cent in the year to Q3 2018, though quarterly comparisons indicate that the intensity of rental inflation was slowing down.

To the end of Q3 2018 there were a total of 339,117 tenancies registered with the RTB, representing a fall of just over 0.5 per cent annually. During the same period the number of landlords also fell, from 176,251 to 173,472, a decrease of almost 2 per cent.

The index shows that rent prices continued their upward trend, albeit at a more moderate pace than previously recorded. Average national rent increased to €1,122 in the third quarter. In Dublin the average rent reached €1,620, an increase of 9.5 per cent (compared to 8.9 per cent in Q2), demonstrating the disproportional strength of and demand in the rental market in the capital compared to the rest of the country. The lowest average standardised rent was €518 in Leitrim, less than a third of the average Dublin rent. The amount of properties generating a rental income of more than €1,500 monthly has also increased, with most of these properties being in Dublin. Only a small portion of properties in the rest of the country were generating similarly high rents.

Rent Pressure Zones (RPZs) have been partly credited with the recent slowdown in the rate of rental inflation as the increase in rents for existing tenancies compared to new tenancies were considerably lower (5.4 per cent and 8.0 per cent respectively, year-on-year). Though it is worth noting that the RPZ rules cap rent increases at 4 per cent every two years (for tenancies which began before the end of December 2016), indicating that a deeper analysis of factors contributing to and locations in which these increases occurred may be required.

71.5 per cent of tenancies in Dublin were for flat / apartment type accommodation in Q3 2018. Property types vary with close to three quarters having two or three bedrooms nationally although a greater proportion of rental properties in Dublin had only one or two bedrooms, perhaps indicative of the abovementioned higher share of flats / apartments being rented in the capital overall.

The duration of agreed tenancies has been increasing steadily since 2007. In the third quarter of last year a quarter of all agreed tenancies were for a term of more than 12 months, something the RTB attributes to the ever-growing importance of the rental sector as a viable tenure of choice.

With the increasing importance of the sector, it is vital to ensure that minimum accommodation standards continue to be promoted, inspected and, in cases of non-compliance, enforced.

The Rent Index is produced by the Residential Tenancies Board (RTB) and the Economic and Social Research Institute (ESRI) quarterly. It is considered an accurate and authoritative rent report on the Private Rented Sector in Ireland as is based on actual data from all new tenancy agreements registered with the RTB nationally.