City rents up 5pc on peak but rises slowing as tenants struggle to pay
Rents in the capital have soared to 5pc higher than their previous 2007 peak and are hitting levels tenants cannot afford, a new report has found.
However, there are tentative signs that the rate of increase is easing off.
Experts said the rate of increase was slowing because landlords now realise tenants cannot afford to pay more money for their accommodation.
Director of research at estate agency Savills, John McCartney, said rents have gone up by 40pc in Dublin since the downturn.
"Rental growth in Dublin may be beginning to face a headwind from absolute limits on tenants' ability to pay," Dr McCartney said.
Some 704,000 occupants live in rented accommodation, according to the Residential Tenancies Board (RTB), the State body that resolves disputes between tenants and landlords and advises the Government.
The rise in the cost of renting was 2.3pc in September. This was lower than the 3.5pc rise recorded in the April to June period, prompting hopes that the runaway rises in rental costs could be slowing down.
Annual growth in the Dublin market was 7.1pc (from €1,285 to €1,375) between Q3 2015 and Q3 2016. Dublin house rents were up by 3.3pc (from €1,431 to €1,478) while city apartment rents were higher by 9.6pc (up from €1,275 to €1,397).
Rents for houses are increasing at a slightly faster rate than apartments, according to the data, which is compiled in conjunction with the Economic and Social Research Institute.
In Dublin, the pace of growth has slowed compared with earlier in the year, with rents increasing by 0.6pc.
The easing off appears to be driven by a marginal fall of 0.6pc in Dublin house rents, while rents for Dublin apartments increased by 1.5pc over the same period.
Head of the RTB Rosalind Carroll said this was the first decline in quarterly Dublin house rents since the start of 2013.
However, the pace of rental cost growth outside Dublin has picked up, rising 3.6pc in the third quarter.
Apartment rents were 9.9pc higher than in the same quarter of 2015, up from €925 to €1,017.
Ms Carroll said the rate of growth in private sector rents appears to be moderating.
She warned, however, that it would be 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," she said.
She pointed out that Dublin had seen much slower growth in the cost of renting in the July to September period this year.
"But taking the third quarter 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."
Ms Carroll noted that rents outside Dublin are rising more rapidly but added that rents outside the capital are still 7.3pc behind the peak level of 2007.