There is a huge disparity between the average national house price and the average that people are paying to rent properties in Ireland, recent statistics have shown.
Despite recent growth, national house prices in Ireland are 25 percent lower than they were in May 2007 at the height of the boom.
Rent prices, however, now stand at a national average of €1,200 per month, an all-time high.
The rent price index never experienced the same dramatic fall as the residential property price index (RPPI) in the worst years of the recession, falling by only 25 percent in total. In contrast, the housing market saw prices decrease by more than half by the end of 2012.
Furthermore, the twelve quarters between the fourth quarter of 2014 and the third quarter of 2017 saw consecutive year on year increases of six percent or higher, with inflation standing above ten percent for the previous six quarters.
House prices have experienced a significant growth since 2013, when they were at their lowest, and grew by close to eight percent nationally in 2016.
Having said that, the far more dramatic fall of house prices in the wake of the recession has caused such a disparity to exist between house prices and rent prices.
Such a gap between house prices and rent prices highlights the extent of the rent crisis in Ireland and there is nowhere in which that gap is more evident than in Dublin.
The rent crisis has manifested itself in the capital, where it is now 23 percent more expensive to rent accommodation than it was at the 2008 peak. On the other hand, house prices in Dublin are 25.9 percent lower than they were at the same time.
Despite significant growths for both the rent and property industries in Dublin in recent years, rent continues to grow at a faster pace.
Dublin rent growth exceeded Dublin property growth in 2016, averaging a quarterly growth of 2.2 percent, compared to a 1.4 percent average quarterly growth in house prices.
Rents have been broadly increasing in Dublin since a low in quarter one of 2011.
South Dublin has been the area worst affected by the rent crisis, and it now costs just under €2,000 per month to rent property there, with the average standing at €1,955.
Apartments, in particular, have been subject to extreme rises in rent prices in the capital and are now 17.6 percent greater than they were in 2007.
In real figures, a Dublin house costs €280,380 on average compared to €412,324 in July 2007. In contrast, it cost roughly €1,725 to rent in an area like Rathfarnham at the start of the year and cost €1,518 to rent in Rathfarnham in 2007, which further emphasises the growing rent crisis in Ireland.
Growing rent prices have led to a fall in living standards for a number of tenants, with overcrowding becoming an issue across the country.
Last month, RTE’s Primetime Investigates televised an investigative look into some of these rental properties, in which up to 12 tenants were living in one bedroom in bunk beds, in filthy and unsafe conditions.
Many of these properties did not meet health and safety regulations, and would put the tenant’s lives in danger if a fire broke out. The high price and low standard of rental properties in Ireland has led to people choosing to save for a mortgage to buy a home rather than waste ‘dead money’ on rent.
Dr Rory Hearne of Tasc believes that the rent problem can be traced back to the Celtic Tiger and the subsequent collapse of the construction industry in Ireland.
“Up until last year we were only seeing 10,000 new houses being built every year, when in actual fact we needed roughly 25,000 a year. There is a gap between the housing that’s needed and the housing that’s being supplied,” said Dr Hearne.
Dr Hearne is supported by statistics which show that there were only 251 properties available to rent across Cork, Galway, Waterford and Limerick cities, as compared to 2,250 properties in 2009 – a 90 percent decrease.
Dr Hearne believes that the policies implemented by the Irish government following the crash in 2008 have led to this current crisis and is critical of how Real Estate Investment Trusts (REITs) are dominating the private rented sector here.
A Real Estate Investment Trust is a foreign company that bought up cheap Irish assets during the recession and are now renting these properties at ‘significant prices’. Dr Hearne believes that the government is at least partly responsible for allowing these companies to flourish in Ireland.
“The government attracted these companies in and gave them a tax break on the profits they made,” said Dr Hearne. “These companies know that it will be very difficult for Irish people to buy property in the coming years and, therefore, know that there are huge profits to be made in the rented sector.”
With homelessness, and the threat of homelessness, at the fore of much political discussion, such statistics show that there is no easy fix to the problem.
By Shane O’Brien and Aimee Walsh