THE STOCK of rental properties on the market is growing at a rate of 10 per cent per month and is now approaching 10,000 homes according to the property website myhome.ie.
The rapid growth in the rental market suggests that would-be buyers are opting to rent rather than buy homes because of the uncertainty in the market and the prospect of further price drops over the winter months.
These new entrants to the rental market say they are saving money by renting for a year and waiting for the market to bottom out, explains Igor Fleming from Dublinlettings.com.
The €15,000 or €20,000 paid out in rent for the year will be more than offset by a €30,000 drop in a house price, he predicts.
The record high in supply of houses and apartments to rent is being fuelled by owners who have failed to sell and who then offer the properties for rent. The outcome is that not only do renters have the biggest ever choice, but the quality they are being offered is also at an all-time high. Those opting to sit out the property slump are in a position to rent expensive homes that they could not afford to buy.
The day of the saggy couch and 50p meter are long gone. The range available includes brand new apartments with luxury fit-outs to opulent period homes in the best suburbs that have not sold and are now being leased.
Apartments at the Alliance building, built inside the metal struts of the Victorian gasholder at the Gasworks development in Ringsend, are now on the rental market after failing to do well when they were first launched back in 2006.
Developer Liam Carroll's subsequent plan to turn the apartment block into a hotel has also been put on the long finger and the apartments are available to rent on a short-term basis for €2,200-€3,000 a month or available to lease for 12 months, at a cost of €1,500 a month.
Caroline McArdle who handles lettings in Lisney says that the top end of the market is doing well and that lots of houses that failed to sell are now being rented.
Number 67 Anglesea Road, an elegant Edwardian redbrick, is a case in point. The revamped house, complete with wine cellar, was put up for sale at €3 million last August, but is now for rent at €9,000 per month.
Number 4 Moyne Road in Ranelagh, a Victorian house with a luxury make-over aimed at buyers rather than tenants, was put up for sale for €1.925 million 12 months ago. It's now for rent at €3,195 a month. Letting agent Niall Clarke from DNG Lettings says that there is now an oversupply of €1 million plus houses on the rental market. Rents have dropped but demand is good thanks to increased demand from would-be buyers who are now opting to rent.
The downward pressure is certainly having an effect at the top end of the market. Take, for example, the 15th and 16th floor penthouse at the Millennium Tower, at Charlotte Quay in Dublin 4. It was put on the rental market in July asking €8,000 a month, this has now been scaled back to a more modest €5,000 a month.
The most recent report from Daft.ie in August found that the supply of available rental accommodation has more than doubled over the last year to a record high. Rents fell in Q2 2008 for the first time since 2004, falling 3.5 per cent in the first half of the year.
One letting agent goes much further saying that rents are down 10 to 15 per cent so far this year and it is likely that this trend will continue into the new year. Certain sectors of the rental market are feeling the pinch more than others. Over the last 15 years over 60 per cent of all new apartments built were two-beds and consequently one and three-beds command a relatively higher price.
The median price for a two-bed unit in the city centre is €400 to €500 per person, while a one-bed is around €500 to €600 per person, according to Fleming.
Sarah Butler of Sherry FitzGerald Lettings says that though supply has increased, demand continues to be strong, particularly in the southside apartment market. "The difference is that people are shopping around more. They are looking at everything and they are very cost-conscious. Still, the market is healthy. We have had to take on more staff to cope. We are renting to a lot of people who are sitting on the fence. They are cautious, and using the rental as a breather."
The growth in the rental market may signal a change of attitude by families towards home ownership. The Irish have one of the highest home ownership rates in the world, but this is being eroded by the static property market. The numbers investing in the residential property market has also shot up over the last 15 years and despite the slippage in rents and competition for rents, rental stock is likely to remain high. As the market drifts to the bottom, many cash-rich investors are waiting for bargains to emerge so they add to their portfolio. Meanwhile tenants can negotiate reasonable terms.
