Rental supply on the up, but more needed

There have been several house prices reports issued in the first few weeks of the year that include availability figures for rental properties around the country; none, to date, have painted a particularly positive picture for tenants. Looking ahead, the residential rental market in Ireland is experiencing a shift, according to an article in the Irish Independent this week, supported by data from CBRE. The latest figures show a tempering of rent increases due to a slight increase in the supply of homes, particularly in Dublin. This has led to projections that rental growth might even fall below the 2 percent cap in some rent pressure zones.

CBRE’s data suggests that private rents in Dublin may rise by between 1 and 2 percent, a notable decrease from the 3.5 percent increase of last year and well below the double-digit growth seen in 2022. This slowdown is attributed to a surge in the supply of purpose-built rental apartments in Dublin, which could add approximately 4,000 units over the last year and this year.n CBRE’s head of research highlighted that this new supply is expected to dampen average rent inflation in Dublin, potentially holding it much lower than recent years. He also mentioned the positive impact of government initiatives on new residential supply in general, stating that new dwelling completions, including estate houses and one-offs, should total above 34,000 units in both 2023 and 2024. This level of housing completions would be the strongest since the crash, although still significantly below what is required annually – estimates range from 50,000 to 60,000 per year until the end of this decade. CBRE notes concerns over the fall-off in private investors, who are understandably wary of market viability and regulation uncertainty. Challenges including interest rates, lower valuations, and regulatory constraints have been impacting the attractiveness of the private rental sector (PRS) for institutional investors, which is opening up opportunities for home builders and smaller-scale investors across the regions. Broadly, the long-term absence of institutional capital could lead to less supply in the market, so there is a need for both public and private capital to meet growing housing targets.

The Irish Independent article also touched upon the work of approved housing bodies (AHBs), which have now become the most active buyers in the market, potentially leading to a significant increase in social and affordable housing across Ireland. Findings from the Simon Community highlight the scarcity of properties available to rent under the Housing Assistance Payment (HAP) scheme. In their latest quarterly ‘Locked Out of the Market’ report, no HAP properties were available in nine out of 16 areas analysed. The number of properties available at any price rose by 28 percent from September to December, from 901 to 1,149, indicating some improvement in overall availability; however, this is coming off an unacceptably low base.

Within Lotus HQ, we are seeing an active start to the new year and our team has already closed our first deal of 2024, supporting the delivery of 250 new homes in County Louth over the coming years. If you are considering a project, contact us to discuss a range of finance options.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group