• PRIVATE RENTS CONTINUED TO RISE IN THIRD QUARTER OF 2016 BUT RATE OF GROWTH HAS SLOWED
• DUBLIN RENTS NOW 5% HIGHER THAN PREVIOUS PEAK IN 2007, WHILE RENTS NATIONALLY ARE 4% BELOW PEAK
— LATEST DATA FROM RTB QUARTERLY RENT INDEX
The latest Residential Tenancies Board (RTB) rent index – for the third quarter (July to September) of this year – shows that while private sector rents continue to rise, the rate of growth slowed in that quarter, compared with quarter two, and that the annualised rate of growth has also begun to slow. The rent index also reflects the first decline in quarterly Dublin house rents since Q1 2013, and rents outside Dublin are now rising at a faster pace than in the capital.
The data comes from the RTB’s Quarterly Rent Index which is compiled by the Economic and Social Research Institute (ESRI) for the RTB. It is the most accurate and authoritative rent report of its kind on the private accommodation sector in Ireland. This is because it is based on 30,260 new tenancies which commenced in Q3 this year, and which were registered with the RTB. It reflects the actual rents being paid, according to the RTB’s records, as distinct from the asking or advertised rent.
Nationally, monthly rents grew by 2.3%, marginally slower than Q2, when they increased by 3.5%. Overall, the data show that rents for houses are increasing at a slightly faster rate than rents for apartments, at 2.6% compared to 1.8%. In Dublin, the pace of growth has slowed somewhat compared to Q2, with rents increasing by 0.6%. The slowdown appears to be driven by a marginal fall in Dublin house rents of 0.6%, while rents for Dublin apartments increased by 1.5% over the same period. This is the first decline in quarterly Dublin house rents since Q1 2013.
Interestingly, the pace of growth outside Dublin picked up in Q3, with overall rents outside Dublin increased by 3.6%. This consisted of a 3.6% increase in house rents while the comparable increase in apartments was broadly similar at 3.4%.
On an annual basis, rents nationally were 8.6% higher than in Q3, 2015; up from €897 to €973. Nationally, rents for houses were 7.4% higher annually in Q3 of this year (up from €900 to €967), while apartment rents were 9.9% higher than in the same quarter of 2015 (up from €925 to €1,017.
Annual growth in the Dublin market was 7.1% (up from €1,285 to €1,375) between Q3 2015 and Q3 2016. Dublin house rents were up by 3.3% (€1,431 to €1,478) and Dublin apartment rents were higher by 9.6% (€1,275 to €1,397). Annual growth in rents for the market outside Dublin recorded increases of 9.7% when compared to Q3, 2015; up from €705 to €773. Again the performance differed by property type. Monthly rent for houses outside Dublin increased by 8.8% (from €735 to €800), while apartments outside Dublin experienced an increase of 11.1% (€666 up to €740).
While the longer-term trends indicate that annual growth has continued, the pace of growth has begun to slow. Following the financial downturn of 2007/08, annual growth in rents nationally registered their largest decline in Q4, 2009, at -14.9%. In the interim they have increased by approximately 23% from that low point to Q3, 2016, and they are now just 4% below the peak levels of Q4, 2007.
While the post-2009 rate of growth in Dublin outpaced the rest of the country, the pace of growth in the capital has moderated somewhat and, although rents in Dublin were 5% higher in Q3 than at their previous peak in Q4, 2007, this quarter’s growth rate slowed to 0.6% compared to Q2.
Up to Q3 last year, the pace of growth in rents outside Dublin was slower than in the capital. However, the speed of growth in annual rents outside Dublin has overtaken that of Dublin in the past year, and continues to rise at a faster pace. This now means that the difference between rents outside Dublin and rents in Dublin has fallen from a gap of 15.5%, at the peak of the difference in Q3 2015, to 7.3% in Q3 this year. The faster growth in rents outside of Dublin reflects similar trends in house prices, where regional prices have exhibited stronger growth than those in the capital since Q2 last year.
At a national level, annual growth was 8.6% in Q3 and has averaged 9.2% so far this year. This is particularly strong when compared to this time last year where average growth was 6.6% for the same period. Houses and apartments in Dublin have been growing at a similar pace over the last year; however this trend changed marginally in Q3, with a slowdown in annual rent growth for Dublin houses to 3.3%, compared to 6.8% in Q2.
Commenting on the latest Rent Index findings, the Director of the RTB, Ms. Rosalind Carroll, said: “While the rate of growth in private sector rents appears to be moderating, it is prudent not to read too much into the results for any single quarter. The market is still volatile and therefore it is difficult to identify patterns.”
“In Q2, rents in Dublin went up by 4.4%, whereas this quarter we have seen much reduced growth of just 0.6% But taking the Q3 2016 data, based as it is on actual rents being paid, as opposed to asking rents, it does appear that the rate of growth has slowed, and in particular that the rate of rental growth in Dublin appears to have slowed. What is also significant is that the rents outside of Dublin are now rising more rapidly than Dublin rents. Annually rents outside of Dublin grew by 9.7% compared to 7.1% in the Dublin market. It should be noted though that while rents outside of Dublin are accelerating, they are still 7.3% behind the peak levels of 2007”.
Ms Carroll said the RTB now has a total of 324,222 tenancies registered, representing 174,158 landlords and 705,183 occupants.
The RTB website www.rtb.ie (click on “rent index”) also contains an Average Rent Dataset which enables people to check the average rent being paid for five different categories of dwelling types throughout the country, in both urban and rural areas. This means people can check what is the actual rent being paid for, say, a semi-detached house or a two-bed apartment in their neighbourhood, or in other parts of the country.
All landlords are legally obliged to register tenancies with the RTB and the number of new registrations with the RTB in Q3, 2016, was 30,260.
The RTB Index is of assistance for a range of Government purposes, including housing policy generally, and informing the Department of Social Protection’s Rent Supplement scheme. It is also an important reference document in landlord/tenant disputes on rent.
About the RTB and the Private Rented Residential Market
The Residential Tenancies Board (RTB) was established in 2004 to operate a national tenancy registration system and to resolve disputes between landlords and tenants. It also provides policy advice to the Government on the rented sector, and its dispute resolution service replaces the courts for the majority of landlord and tenant disputes. According to the 2011 Census, nearly 1 in 5 households in the country were renting their accommodation in the sector.
Formerly known as the Private Residential Tenancies Board (PRTB), its name was changed to the Residential Tenancies Board (RTB) in April this year. This is to reflect its broadened remit in the rental sector, with the addition of Approved Housing Bodies to its remit. Approved Housing Bodies are not-for-profit housing providers, often referred to as housing associations, that provide accommodation for those in need. This change ensures that tenants and landlords of these properties are afforded protection under the Residential Tenancies Acts and will be able to access the disputes resolution services of the RTB. There are over 30,000 tenancies in the Approved Housing Body Sector in Ireland.