Is 10% inflation the new normal?
The most recent rental report from Daft.ie came out last week and deals with rental properties all around the country throughout the first three months of 2016. Current rental prices are directly compared the prices of the same property type within the same period (January to March inclusive) last year.
The results will not surprise market watchers. The average price of rented homes has increased for the fifteenth (yes, 15th!) consecutive quarter. While Dublin remains the most expensive location, with average rentals costing €1,365 to €1,663 per month, Wicklow and Wexford have both seen significant increases.
The average cost of a rented home in Wicklow has risen 7.4% to €1,029 per month. While the increase in Wexford has been slightly more modest, at 6.3%, the average monthly rental is now €626, which is almost on par with Waterford City pricing.
The Daft.ie report brings up the thorny issue of examining whether renters would be financially better off purchasing (based on a 90% LTV or Loan-to-Value mortgage) or continuing to rent. For two-bed apartments and three-bed houses, in many areas, tenants would be better off paying a mortgage, rather than ever-increasing monthly rent, but of course this only applies to would be first-time buyers who can afford the 10% deposit and whose jobs and credit rating are considered suitable by the lenders.
One observation that we have seen in recent years is that would-be buyers are slow to apply for their first mortgage if they feel that they are likely to be turned down. In many instances, they would make ideal mortgage candidates but media-watching has led them to believe that banks are not lending. In our experience, this is simply not the case at the moment. Mortgage lenders are fighting to attract the best buyers and have started to consider Irish applicants living abroad who are planning to return in the near future.
A few points became very clear from this latest industry report, specifically, stock of housing is at an all time low. This applies not only to the rental market but to the sales market too. This creates an ideal opportunity for investors to enter the marketplace, knowing that upward trends in the rental market are likely to continue for another few years.
It is less ideal for current tenants, who are facing ever-decreasing choice and likely rising prices. This scenario makes for interesting opportunities for our recent emigrants who are currently living overseas but hoping to return to Ireland at some point. Ought they compete for what housing stock is left and rent it out to produce an income until they are ready to move back? By doing so, not only are they creating an income but they are essentially ‘hedging’ their bets by investing in property that can be used or sold (at market price) when they return.
One thing is for sure, now is definitely the time for sellers to bring their properties to the market. With more buyers than available properties in most locations, properties that are reasonably priced will certainly attract attention in the marketplace. This will be very relevant for owners of derelict buildings that might have struggled on the market over the past few years. Here at Kinsellla Estates, we are dealing with queries from self-builders and would-be developers who have a interest in derelict buildings with and without lands attached, give us a call to discuss this further and we can advise on current supply and demand trends in your locality.
To view the full Daft.ie Rental Report, click here: http://www.daft.ie
For specific queries or to speak with a local property expert about your buying and selling needs in Wexford, Wicklow and surrounding areas, contact Michael, Alan or Eileen Kinsella at kinsellaestates.ie.
Email me directly on email@example.com or telephone: +353 53 94 21718