Between 2010 and the second quarter of 2022, Ireland’s average rent increased by 85% as opposed to the EU average’s 18% growth, according to a recent study.
The latest Housing Market Monitor published by the Banking & Payments Federation Ireland (BPFI) has shown that the demand for housing as well as the significant gap between average rent and mortgage payments have led to prices rising consistently.
The report added that “considerable pent-up demand and population growth” have both played a role to the crisis.
According to Brian Hayes, Chief Executive of the BPFI, increased housing and general living expenses as well as upcoming economic uncertainty will probably have an impact on mortgage demand.
“As our latest monitor shows today, looking to the medium and longer term, the significant gap which now exists between average rents and mortgage payments coupled with significant latent demand are likely to balance any negative impact on demand for mortgage lending in the short term which will likely continue to impact house prices unless we see a substantial increase in supply,” he said.
For example, Hayes said, the average monthly mortgage payment for a first-time buyer during the first half of 2021 was just over €1,000 in comparison to the national average of over €1,400 for rent, with the difference being noticeably larger in Dublin.
Ireland’s price growth is outpacing that of the rest of the EU, according to the BPFI monitor. With the most recent Eurostat data showing that average rents in Ireland have increased by over 85% between 2010 and the second quarter of 2022, the third highest increase in the EU, compared to an increase in average rents of 18% during the same period in the EU, this is especially stark in terms of rental prices.
During the same time period, the EU saw an increase in housing costs of almost 50%, with average prices in Ireland rising by more than 55%.
The BPFI monitor also found that while there has been a significant increase in new housing to the market this year, population growth continues to outstrip supply and in addition to this “we are now seeing a decline in the figures for the commencement of new builds”, Hayes said.
He added: “Commencement figures of new housing in the first nine months of 2022 were 5.4% higher than in the same period of 2019. However, we see that the commencement activity seems to be declining on an annual rolling basis after peaking at 35,000 units during the first quarter of 2022 to some 26,600 units in October 2022.
“Meanwhile, in terms of population growth, the latest Census figures from the CSO show that, between 2016 and 2022, the housing stock increased by over 120,000 whereas population growth during the same period was over 360,000.”