The housing crisis keeps deepening and is now headed towards a massive storm. Recent reports show plummeting stocks, higher rents ever recorded and at least a 20% increase in the prices of houses in the forthcoming years. According to the findings published by Daft.ie, overall rents have drastically increased for the 21st consecutive quarter and it doesn’t stop here.
Dublin is mostly affected by the crisis
This latest report was compiled by Ronan Lyons, assistant professor of Economics at Trinity College Dublin.The report has shown that there has an increase of 11.2% in the average rent across the country which now stands at €1,198. Moreover, the number of properties available for rent across the country decreased by more than 16% compared to the previous year and that not even 3400 properties were available in the market for rental on the 1st of November.
In Dublin, the condition is most severe with merely 251 homes listed for rent throughout Waterford, Limerick, Galway and Cork. There is a drastic decrease in rental supply. Data from the report also suggests that having mortgage on smaller properties like a two-bedroom property or a one-bed apartment is generally cheaper than renting. This also holds true for three-bed properties within Dublin and some other cities. 80% of the largest increases in rent per quarter have happened since the beginning of 2016 and with 8374 accessing emergency accommodation, homelessness reached a record high in September 2017.
Experts cannot agree on a common solution
Prof Lyons mentioned in the report that “Extra supply is quite simply the only solution.” Approximately 50,000 houses are needed by the country annually, along with 15,000 new rental houses. He was also of the opinion that while capping the increase of rentals may tackle the symptoms of the problem, it won’t really be dealt with on a root-level.
Mike Allen, director of Focus Ireland advocacy, believes otherwise. While he agrees that supply is indeed a solution but the short term effect must not be neglected. He has demanded that government should take instant action to protect the tenancies, especially from landlords who are hoping to remove their tenancies in order to sell up or to renovate.
Mr. Allen believes that different forces are colliding in the housing market. A report by Economic and Social Research Institute resonates this view and stated that in the coming three years, there will be a 20% increase in the housing prices. This is based on the strong economic growth projection, according to Professor Kieran McQuinn’s ESRI research report. Chairman of the Irish Property Owners Association, Stephen Faughnan, added that despite the increase in rents, landlords were still not showing how much their rental income has increased.
John-Mark McCafferty, chief executive of Threshold, stated that the soaring rents and increasing house prices definitely creates and escalates the perfect storm in which more and more individuals struggle to get their hands on real estate through renting or buying. He believes that landlords are not adhering to pressure zones and that people should focus on a transparent rent register.
Article published in The mechanisms of personal insolvency in Ireland :