[Article] (Some) Dublin rents tumble by 25 per cent

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Spellings corrected.

Dublin rents tumble by 25 per cent
13/07/03 00:00
By Susan Mitchell
Property owners are experiencing a slump in rents of 25 per cent in some Dublin areas, according to some of the capital's leading estate agents.
While rents for new properties remain strong, Lisney and Sherry FitzGerald's letting agencies confirmed that rents for second-hand properties in the city centre and in south Dublin had dropped considerably.

"It is happening across the board," said Eileen Sheehy of Sherry FitzGerald Sheehy. "Landlords are now accepting this and pricing their properties accordingly. Some tenants are also negotiating a lower price with their landlords before renewing their leases."

The popularity of the buy-to-let market increased last year following the reintroduction of mortgage relief for investors in the 2002 budget and the uncertainty in the equity market.

Some economists have already cautioned about a potential overhang of supply which has been sold to investors, but not yet built.

According to Sheehy, apartments have been particularly affected. "There are so many new developments around the city that choice and availability has increased," she said. "Second-hand one- and two-bedroom apartments have been hit hard."

For example, Sheehy said a two-bedroom apartment in Mountbrook, Blackrock, Co Dublin, which would previously have achieved about €1,400 a month, was now renting for €1,050.

Another estate agent cited the example of a two-bedroom top-floor apartment in a complex beside Marlay Park in Rathfarnham, Dublin 16. It previously rented for €1,650 a month, but this has dropped to €1,200.

In Ballsbridge, Dublin 4, a three-bedroom mid-terrace house that fetched €1,900 per month this time last year through Gunne Residential is now getting €1,400 with Sherry FitzGerald Sheehy.

In the city centre, units in the International Financial Services Centre have been badly affected. Agents reported that average two-bedroom apartments had dropped from €1,50 0 to about €1,050 a month.

"The drops have made it difficult for people who purchased property in the past few years," Sheehy said.
"Their rents are nowhere near what their repayments are, but those who have had the property for a while and who continue to put money back into it are still doing well."

Joan Fogarty, head of residential lettings at Lisney, said that, while there was still activity in the lettings market, there had been an increase in the number of available properties, which had resulted in properties taking longer to let.

Lisney has found that properties generally take between six and eight weeks to let. Last year, most landlords had a two to four-week wait, according to its letting department.

Ken Morgan of Sherry FitzGerald Morgan said properties in north Dublin had dropped by an average of 10 per cent. "There have been incidents where the drops have been more severe, but they are the exception rather than the rule," he said. Anecdotal evidence from some of Dublin's largest letting agents is not strengthened by surveys carried out by estate agents. The most recent survey from Gunne Residential, for example, found that in the 12 months to March, average rental levels in Dublin decreased by only 4.2 per cent.

But Bank of Ireland economist Dan McLaughlin said the dramatic findings were consistent with reports. "There is an oversupply of rental properties in certain areas, but it is important to recognise that this is not a nationwide phenomenon. There is a rent component in the Consumer Price Index and that is down by 0.3 per cent nationwide," he said.

McLaughlin expects 62,000 home completions by the end of 2003.

"Home completions are up and so property is not an area where I would expect to see price rises. I suspect that a lot of professional investors left Ireland in 2000 and went elsewhere.

"Many of the investors around at the moment may not be as sensitive to yield calculations. I would be cautious about investing in property. The yield on property is very low and the yield on equities looks much more attractive right now," he said.