[Article] Economists predict up to 10% fall in Dublin rents

Victor

http://www.thepost.ie/web/DocumentView/did-811260461-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

Economists predict up to 10% fall in Dublin rents
08/02/04 00:00
By Susan Mitchell

Economists have cautioned about a downturn in the buy-to-let sector in Dublin, with projections of a further fall in rents of up to 10 per cent.

Jim Power, chief economist at Friends First, and Robbie Kelleher, chief economist at Davys Stockbrokers, said the reintroduction of mortgage relief for investors in the 2002 budget and uncertainty in the equity market had led to a significant increase in the number of rental properties available.

The number of house completions has also risen. This, coupled with the relative affordability of buying in the current interest rate environment, had exacerbated the current overhang, Power said.

He predicted that rents in Dublin would fall by up to 10 percent this year. This was echoed by Kelleher, who estimated that up to 15,000 investment units throughout the country remained empty.

Last year, estate agents confirmed that landlords in some Dublin areas had experienced a slump in rents of up to 25 per cent. A spokeswoman for Home Locators in Dublin 2 said that, while it was not all bad news, there appeared to be no reprieve in the offing this year.

"I would not be surprised by a further drop in rents," she said. "There is an oversupply in certain areas. Tenants have a much greater choice and are under less pressure. Landlords realise this and are pricing their properties accordingly. Rents are open to negotiation, as there is no money in an empty property."

While rents for new properties remain strong, rents for many second-hand properties in the city centre and suburban Dublin have dropped considerably.

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

A two-bedroom apartment at Dunstaffnage Hall in Stillorgan, which Home Locators rented for €1,400 per month in 2002, was rented for €1,150 late last year. She added that good blocks with parking and within easy walking distance of the city centre were still in strong demand.

Joan Fogarty, head of residential lettings at Lisney, said that, while there was still activity in the lettings market, the increase in the number of properties available meant that tenants had more bargaining power.

Two weeks ago, Lisney sought €1,200 for a two-bedroom top floor apartment at Merrion Court, Ailesbury Road, in Ballsbridge. Fogarty said that this could have achieved up to €1,600 a few years ago.

But anecdotal evidence is not supported by estate agent surveys. Hooke & MacDonald research on rents in the Dublin market found that, while growth in rental values over the last three years had moderated, property owners were still managing to achieve attractive rental incomes.

Bank of Ireland chief economist Dan McLaughlin believes that professional investors have left the market, but predicted mixed rental trends in 2004.

"There is no comprehensive, objective data available. There is an oversupply of rental properties in certain areas, but I don't believe rents will fall across the board," he said.

voxpop

Its about time, hopefully house prices will follow suit

spongebob

Originally posted by Angry_Penguin
Its about time, hopefully house prices will follow suit

They will.

The economists compiled their data before the rules on housing benefits changed at the end of January . Anecdotally, it seems as if many investors are having problems in Galway too ...... how do many people claim rent relief if that cannot prove they were renting for the previous six months, as they now must.

M

Victor

Originally posted by Muck
Anecdotally, it seems as if many investors are having problems in Galway too ...... how do many people claim rent relief if that cannot prove they were renting for the previous six months, as they now must.

Well they would have to produce receipts from landlords and if recipts weren't forthcoming, some very interesting questions would be raised.