Repaying a mortgage on a three-bedroom home is now less expensive than paying rent in nearly every region in the country. IPAV, the Institute of Professional Auctioneers and Valuers, highlighted this point in its response to daft.ie’s latest report on the rental sector here, which suggests rents rose at an average annual rate of 5.6 per cent in the second quarter of this year, the highest level of growth seen in more than two years.
Only in the two most expensive areas to buy property – Dublin 4 and Dublin 6 – was repaying a mortgage on a typical home more expensive than paying rent, it said.
"In every other area of the country it is cheaper to service a mortgage that pay rent, substantially so in many areas – if one could only acquire a mortgage," IPAV said. And this is happening at a time when mortgage rates have never been cheaper and Ireland, for the first time, is now seeing European style, long-term fixed interest mortgages, it added.
Declining rates of home ownership, particularly among younger age cohorts, combined with higher rent levels have been a defining feature of the State’s property market. Daft’s report suggests the average monthly rent – the figure is based on asking prices not actual rent paid -now stands at €1,477 – nearly 100 per cent up on the €742 per month figure seen in late 2011. In Dublin, the average was put at €2,035.
The Daft report suggests rent inflation in Dublin in the second quarter was running at a more moderate 0.5 per cent, lower than the national average of 5.6 per cent and considerably lower than the rates seen in other cities. Is this down to rent controls or because we’ve hit peak affordability?
Pat Davitt, IPAV chief executive, said one issue that has contributed to inflated rents is the decision to leave owners of new properties exempt from the Rent Pressure Zone (RPZ) rules. New properties were left outside of the RPZ legislation entirely until July 2019.
“The exclusion means higher rent levels are set, which later become the comparables cited by others to justify raising their rents,” he said.
It’s just element of the dysfunction of the Irish property market right now.
