More than a quarter of home sales in Dublin in the third quarter involved landlords offloading rental properties, according to estate agent DNG.
The company’s latest report on the capital’s residential market highlighted what it described as “the negative impact” of recent rental sector reforms.
It said the percentage of DNG sales by landlords or investors exiting the rental market increased to 27 per cent of all sales in the third quarter, up from 20 per cent in the previous three-month period.
In June, the Government announced changes to the State’s system of rent pressure zones (RPZs), including rolling six-year tenancies of minimum duration for smaller landlords.
READ MORE
“As we warned during the summer, the impending changes announced to the rental sector in June have reduced supply in the rental market in the short term,” DNG chief executive Keith Lowe said.
“Many landlords have recently called time on their involvement in the sector by offloading their rental portfolios and properties due, in the main, to these proposed reforms,” he said.
“The main issue facing landlords in light of the new measures is that they will no longer be able to terminate a lease in order to sell the property with vacant possession, forcing small landlords to have to wait six years to get vacant possession and large landlords will have to sell with a tenant in situ at a discounted price or wait until the tenant leaves,” Mr Lowe said.
[ Housing targets unlikely to be met as commencements slow, ESRI warnsOpens in new window ]
“This will have a further detrimental effect on supply in the rental sector, and increase rents due to the reduction in supply, but on the upside, it will provide more supply of ex-rental accommodation in the sales market that will be purchased by homeowners which will be an unintended positive aspect of the proposed legislation,” he said.
DNG’s latest price gauge suggested that house price inflation in Dublin moderated for a third quarter in a row in the three months to September.
It indicated that second-hand property values in the capital rose by 0.9 per cent in the third quarter in contrast to 2.5 per cent price hike seen during the same period last year.
The NFL comes to Dublin: How it became the richest sports league in the world
As a result the annualised rate of Dublin house price inflation moderated to 6.2 per cent for the year to September, it said.
According to the company, the average price of a resale property in the capital now stands at €605,612.
DNG noted that prices at the upper end of the market remain 24.5 per cent below their previous peak in 2006, while prices at the entry and mid-market levels are less than 5 per cent lower.
The company said first-time buyers accounted for just over half (52 per cent) of purchases of resale properties in the capital.
A further 19 per cent of buyers were doing so in order to trade up in the market, while only 5 per cent were buying in order to trade down, “reflecting the lack of suitable properties for people to ‘right size’ to, as well as the continued lack of availability of bridging finance to cover such moves”.
“The latest results of the DNG house price gauge paint a picture of stability in the Dublin residential market at the present time, with price inflation moderating as this year has progressed,” DNG’s director of research Paul Murgatroyd said.
