Limerick folk v bad to support stuff locally
its not confined to Limerick people really, well not in the instance here of not being happy with apartments. This is everywhere in Ireland.
Don’t be getting in the way of Gil having a go at the Limericks
Bottom of Marlborough Street and Abbey Street that is being renovated and brought back to us. Ground floor retail plus six apartments. Curious of the cost.
Ireland is missing at least 200,000 rental homes. And that number is growing, not shrinking
In the last few months yields have reached a three-decade high. While the sale segment finds some semblance of balance, the rental segment continues to struggle.
The latest Daft.ie Rental Report is out today. It contains some mixed messages. Overall, it is perhaps best summarized as evidence that things have stopped getting noticeably worse. Whether that is good news or not depends perhaps at least as much on your political outlook as your economic outlook.
Those keen to knock the Government will point to yet another quarter of double-digit annual inflation in rents. Sure, the rate has fallen from 14.1 per cent in mid-2022 to 11.7 per cent in the first quarter of 2023. But overall, that is an annual rate of inflation that is unchanged on the same period last year – and regardless of the past levels, increases of 10 per cent or more in a year are a sign of a system under extreme pressure due to a lack of supply.
Those keen to spot a turning point will be able to point to other elements in the report, though. Open-market rents did increase between the last quarter of 2022 and the first quarter of 2023 – but by just 1 per cent. Market rents had increased by an average of almost 3 per cent per quarter during 2021 and 2022. For the Dublin market as a whole, the increase of 0.5 per cent in three months was again well below the average for 2021-2022 (2.6 per cent).
Not only that, a number of markets saw rents fall in the first three months of the year compared to late 2022. This includes Dublin 5, Dublin 10 and Dublin 15, as well as Wicklow and all four major cities outside of Dublin. In the case of Cork, this ended a truly extraordinary run of 36 consecutive quarters where rents rose in every single quarter compared to the previous three-month period, extending all the way back to late 2013.
Limerick and Waterford cities also saw market rents fall in the first quarter of the year – by 1.6 per cent and 2.3 per cent respectively, not insignificant falls. But in both cases, rents had fallen in 2019, so the long run of increases during the 2010s had already ended. Both Galway and Dublin had seen rents dip during covid19, in Galway’s case only marginally, meaning Cork’s run was completely unique.
Indeed, taking the four cities as a group, the quarterly fall in rents of 1.8 per cent is the biggest fall in three months since the final quarter of 2011. This is evidence that – while the year-on-year figure is still buoyed by three-quarters of significant increases in 2022 – market conditions do seem to have changed a bit in early 2023.
Outside the cities, the change in trend is less obvious. Leinster, like Dublin, saw more muted increases quarter-on-quarter. But Munster, Connacht, and Ulster – outside the four cities – saw substantial increases in market rents once more. In the case of Munster (outside the three cities), the 3.8 per cent average increase in rents, quarter-on-quarter, was the biggest since mid-2021.
Trends in market rents are, therefore, something of a Rorschach test – many will see what they want.
For rent
The figures on the number of homes available to rent on the open market offer a bit more clarity. They point to a market that has stabilized but has done so at an extraordinarily tight level of availability.
There were just 959 homes to rent on the open market on May 1, only the third time in a series that extends back over 200 months where there were fewer than one thousand homes available to rent. One of those other occasions was on the same date in 2022, when there were just 851 homes to rent. So the year-on-year figure has improved.
But the improvement in availability is tiny compared to the deterioration that preceded it. During the period 2015-2019, when rental supply was already tight and rents rising as a consequence, there were an average of almost 4,000 homes on the rental market – with over 1,500 of those in Dublin. Now, the country has fewer than 1,000 homes and less than 500 are in Dublin. There may have been an improvement in the last 12 months – and that’s certainly better than things getting even worse – but the improvement is very small in the grand scheme of things.
As I’ve written about in this column a couple of times before, the measure of availability is a combination measure: it reflects both supply and demand. If 1,000 homes are available to rent on January 1 and 3,000 come to the market during January, how many are available to rent on February 1 is a function not just of the 3,000 that came on but also the strength of demand.
To better isolate the supply side, therefore, we can look at that flow. It highlights the sheer scale of the challenge facing policymakers trying to fix Ireland’s rental shortage. In 2009, almost 165,000 rental homes were advertised on the open market. This was a peak and perhaps a false peak, in that some of those were properties originally destined for the sale market but which ended up as rental homes because of the property crash.
By 2012, the volume of rental homes had fallen to roughly 132,500 and it continued to fall as the decade progressed, to 90,000 in 2014 and below 70,000 in 2016. This seemed to be close to the natural level of supply, though, for the following five years. The annual average for 2016-2021 was 62,000 rental homes being advertised over the course of the year.
Since early 2021, though, the volume of supply has collapsed. In the 12 months to April 2023, just 30,000 rental homes were put online. In principle, this could simply be a market share issue: rental homes go somewhere else rather than daft.ie.
But this argument falls at the first hurdle. The RTB does not consistently provide the number of newly registered tenancies, but it is possible to track this number periodically over the last eight years and it shows the exact same trend.
Worse, with the length of the typical tenancy having doubled over the last decade from 1.5-2 years to something like 3-4 years, this means the gap needs to be filled for a longer period of time. Looking back over the last 15 years, the ‘magic number’ is something like 100,000 homes. When more than 100,000 homes were advertised over the course of a year, rents fell, while if fewer came online, then rents rose.
The gap, therefore, stands at 70,000 per year – and needs to be multiplied by the number of years of a typical tenancy. Ireland is missing at least 200,000 rental homes. And if anything that number is growing, not shrinking, with each passing month.
Demand and demographics
It’s growing in part because housing demand is growing. With changing demographics, in particular, falling household size, and rising population, we need more homes of all types, including market rental homes. It’s also growing because of supply-side issues. Ireland’s rental sector is bleeding homes – but unfortunately, the RTB database blackout means we cannot see this in real-time.
What we do know is that, in the second half of 2022, almost 5,350 landlords gave notice of termination in order to sell their property. It is highly unlikely that these properties will stay in the rental segment, given the strong sales prices and the paucity of buy-to-let mortgages. On top of these, a further 1,500 are to be effectively changed into owner-occupier dwellings as the landlord (or a family member) is moving into the property. Together with some classed as ‘change of use’ and others that will be out of commission for some time as they are being renovated, the rental segment lost probably 7,000 homes in the second half of 2022 alone.
Offsetting these are homes coming onto the market in developments that have opened up for the first time. All of these were in Dublin. During the second half of 2022, across almost 30 developments that were opening up, the number of registered tenancies effectively doubled from 1,270 to almost 2,600. There may be other smaller developments that opened in this period, which means this figure might understate the true increase.
All in, a best-case scenario is that Dublin added 3,000 new rental homes in the second half of 2022 – while the country lost 7,000. Given that Dublin is about 40% of the rental market, it probably lost the same number of existing rental homes. Dublin is treading water while the rest of the country lost about 4,000 rental homes in six months.
Compounding this is the fact that this is the fastest rate at which new rental homes have been coming onto the market in almost two decades. And despite that, it is unlikely to have been enough.
A persistent imbalance between supply and demand in the rental segment is now happening at the same time as the sales market is coming into far greater balance, as demand softens with inflation and interest rate rises.
The figure accompanying this piece shows the all-in average market yield – the annual rent as a fraction of the capital value – for Irish housing, over the last decade. The story of the 1990s and 2000s is somewhat better known.
Yields on Irish housing had typically been between 8 per cent and 12 per cent for much of the half-century up to the 1990s. Yields then fell as Ireland entered the Single European Market – but kept falling, well past the healthy level, as credit conditions loosened in Ireland, as in some other countries.
By 2006, the yield on housing was just 3 per cent. Where 15 years before, people had been only happy to pay 10 years rent to secure a property, now they were 30 times the rent or more. This was unsustainable and the yield corrected back to above 6% by 2013.
And there it largely stayed for much of the 2010s. There were a few ups and downs but in mid-2019, yields were pretty much the same as they had been in mid-2013. By pushing down sale prices briefly, covid19 caused a brief blip in the yield – but for much of 2021 and 2022 yields were within the same range.
This is not a sign that the market is healthy, per se, but rather a sign that both sale and rental markets were unhealthy in the same way – the lack of supply was common to both.
In the last few months, though, yields have reached a three-decade high. While the sale segment finds some semblance of balance, the rental segment continues to struggle. In my next piece, I’ll dig a little more into what a high yield means, both about we should understand the housing system, and the broader economic system, and what it means for policy solutions.
This situation is starting to hamper further tech sector expansion. Pipelines of jobs but no where to put the employees unless they can sleep under their desks. Jobs are being diverted elsewhere.
This is the only thing that might make these cunts pull the finger out and get moving.These Tec nerds only need apartments anyways as everywan of them are single.Build high and build often.Apartments are ideal for young couples or single people.And enough with these 4/5/6 story buildings go 15 or 20 like most normal cities.
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Where abouts in Aleppo is that?
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The nice part.
Well wear. Is it a summer house or are you coming home?
I’m coming home (once my lass is finished school)
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With the secretary or the wife?
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Hmmm
TBC
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Did you hide all the rocks onsite?
I have no idea.
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With a JCB
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