⦁ PRIVATE SECTOR RENTS GREW BY 7.8% ACROSS THE COUNTRY AS A WHOLE IN Q4 2016
⦁ PRIVATE RENTS IN DUBLIN NOW 8.3% ABOVE 2007 PEAK LEVEL; 2.7% BELOW PEAK FOR WHOLE COUNTRY.
⦁ EXPANDED RENT INDEX CAPTURES RENT LEVELS BY LOCAL ELECTORAL AREA.
⦁ TWO ADDITIONAL LOCAL ELECTORAL AREAS MEET THE DESIGNATION CRITERIA FOR RENT PRESSURE ZONES: COBH AND MAYNOOTH.
Wednesday 29th March 2017: Growth in private sector rents continued across all regions of the country in the final quarter of 2016, according to the latest Quarterly Rent Index from the Residential Tenancies Board (RTB).
Private sector rents across the country as a whole grew by 7.8% year on year from Q4 in 2016, and the standard national average rent in the final quarter of last year stood at €986 per month.
Overall, nationally, rents are now 2.7% below the 2007 peak. Outside of Dublin, houses are 11.1% below the 2007 peak level, while apartments are 5.8% below, although rents have been steadily increasing since the beginning of 2015.
Demand in Dublin increased significantly in Q4 2016, reflected in an 11.1% increase in rents for apartments. Rents in Dublin are now 8.3 % greater than the Q4 2007 peak. The growth in rents for apartments was more pronounced than for housing, now standing at 12.3% above the 2007 peak, compared to 5% for houses.
Looking at the quarter-on-quarter picture, at a national level, the growth rate increased at a rate of 2.7% and, in Dublin, rents for houses and apartments in Q4 2016 were up by 3.3% and 4.2% respectively. Outside Dublin, the pace of growth in rents for houses slowed by 0.3% in the quarter, while the pace of growth in apartments quickened. In 2016 the average quarterly growth in the Dublin Rent Index exceeded the equivalent growth rate in national house prices, growing 2.2% compared to 1.4%.
The RTB Rent Index, compiled by the Economic and Social Research Index (ESRI), has also now been expanded and this edition, for the first time, also reflects the inclusion of more localised geographical information, based on analysing rents for each Local Electoral Area (LEA). The data captures local rental price variations more accurately and allows for disaggregation of standardised rents across all LEAs.
This, more granular, data is used to determine what areas are designated as Rent Pressure Zones (RPZs); that is LEAs where rents increased by 7% or more in four of the previous six quarters and where the average rent is above the average standardised national rent.
Since legislation providing for the establishment of Rent Pressure Zones (RPZs) was introduced, LEAs in the counties of Dublin, Cork, Galway, Wicklow, Meath and Kildare were designated as RPZs by Minister Simon Coveney. Now, following the findings of the RTB Q4 2016 Rent Index, two additional LEAs will meet the designation criteria for rent pressure zones: Cobh and Maynooth.
Commenting on the new, expanded format of the index, the RTB Director, Ms. Rosalind Carroll, said the RTB had sought “to provide this information as soon as possible to all concerned - tenants, landlords, estate agents, central government, local authorities and other State agencies - so that all users can benefit from this more granular-level information, and relate the information contained in the Index to the rules governing the establishment of the Rent Pressure Zones”.
Ms Carroll added: “The Rent Index report shows that rents in Dublin and the surrounding commuter counties, along with Cork and Galway Cities, are among the highest relative to the standardised average rent. These results reflect a rental market that remains volatile with restricted supply”.
The Rent Index for Q4 2016 was based on 26,276 tenancies registered. The methodology to enable the provision of data at the LEA level has been adapted and tested and, therefore, the Rent Index can now provide a better picture of local markets. It remains one of the most authoritative reports on the private rented sector.
Private Rental Market by Numbers
Dublin was still the largest rental market in Q4 2016, accounting for around 38% of the total.
Property size and type
Two and three-bed properties are still the most common on the market and, combined, they make up around 69% of the market. Nationally, the most common property type is apartments, accounting for 43% of the total; and the second most common properties on the market are semi-detached houses.
Rents and house prices
The pace of growth in the Dublin rent index exceeded that of house prices in Q4 2016, growing 2.2% compared to 1.4%. Although there was an increase in rents outside Dublin, the growth was moderate at 0.6%.
Distribution of rents
Around 44% of properties are being rented for between €100-200 per week, while rents of more than €300 per week now account for 23% of the total.
About the Residential Tenancies Board and the Rent Index report
We are a public body set up to support and develop a well functioning rental housing sector.
Our role is to resolve cheaply and speedily disputes between landlords and tenants, maintain a national register of tenancies and supply data and advice on the sector. Our remit extends to the Approved Housing Body sector, as well as the private rental sector.
The work of the RTB can be divided into three main areas;
- All private residential landlords and Approved Housing Bodies, who are not for profit housing providers, often referred to as Housing Associations, are obliged to register their tenancies with the RTB. By 2016 year end, there were 325,372 tenancies registered with the RTB and it has a public register of tenancies available on its website (www.rtb.ie) . The registration of tenancies enables the RTB to collect important data on the sector, but is also a key part of regulating the sector and ensuring landlords and tenants are aware of their rights and responsibilities.
- Since 2004, the RTB has replaced the courts in dealing with the majority of disputes between landlords and tenants through its Dispute Resolution Service. This service offers a choice of resolution types to parties, mediation or adjudication. By 2016 year end, the RTB had received 4,837 applications for dispute resolution, our highest number to date.
INFORMATION AND ADVICE
- The RTB provides high quality information and advice to the public, tenants and landlords on the rights and obligations in terms of both living and providing accommodation in the rental sector. The RTB also provides high quality data on the rental sector, such as the Rent Index, which allows it to monitor trends in the rental sector, but also allows individuals to check and compare rents in particular locations.
The RTB continuously strives to improve and develop its services so that its customers are supported in registering with the RTB, resolving disputes, and accessing information.
Rent Index Report – Additional Information
A technical description of the new model and how it compares with the older approach is contained in the technical appendix on page 24 of the Rent Index Report.The older RTB index is constructed following the practice of the Central Statistics Office when constructing the Residential Property Price Index and uses a “rolling” time dummy hedonic regression model.
The old model, because it provided results at aggregated levels (National, Dublin, and ‘outside of Dublin’), worked very well and is still useful in providing detailed analysis on differing trends between apartments and houses; the distributions of rents, and analysis of the Dublin and ‘outside of Dublin’ markets.
For the new index, on the other hand, an alternative approach is required whereby the model is estimated over the entire time period (2007 Q3 to 2016 Q4), and time dummy variables are then included in the hedonic regression to capture the change in the index for each LEA.
The results from the new model present a near identical assessment of national trends in rents to that which emerges from the older model, and in the calculation of standardised rents, the difference is marginal. It is particularly important to note that in no instances would the transition from the old to the new model result in a different Rent Pressure Zone treatment of a Local Electoral Area.
In the interests of transparency, the RTB will continue to provide data using both methodologies for at least the next two quarters in order that confidence is maintained in the integrity of the index.
Given the large amount of regional information now available, the expanded Rent Index now presents the results through the use of “heat-maps”, with different colours assigned to different criteria:
⦁ whether the LEA has an annualised growth rate in excess of 7 per cent for four of the last six quarters;
⦁ whether their average standardised rent is above, or below, the national average; and
⦁ where both conditions prevail and a resulting Rent Pressure Zone should be designated.
The “heat” maps on pages 7 and 8 of the Rent Index report show that LEAs mainly centred around Dublin, Cork and Galway experienced both conditions.