A chronic supply shortage has seen the cost of renting a home rise dramatically over the last year.

In cities across the State yearly increases are up to 16 per cent, according to the latest report by property website daft.ie.

The survey found there were fewer properties to rent nationwide at the beginning of May than at any point since records began. The quarterly rental report, published on Tuesday morning, shows rents nationwide climbing by an average of 2 per cent in the first three months of the year.

The national monthly rent in March was €1,006. It is the first time since May 2008 that the average has been above €1,000.

In Dublin, the annual rate of rent inflation, in the year to March 2016, was 8.8 per cent and rents in the capital are now 1.3 per cent higher than their previous peak in early 2008.

The highest rise countrywide was in Cork city, where rents were up by 16 per cent in a year.

There were also strong rent rises in other cities in the year to the end of March, with rents in Galway up 12.7 per cent. Rents in Limerick have risen by 12.4 per cent and those in Waterford city are up by 11.1 per cent. Outside the major cities, rents have risen by 8.7 per cent in the past year.

Capital problem

At the beginning of this month supply was at its lowest point on record, with fewer than 3,100 properties available to rent nationwide.

On the same day last year the figure was 4,300 and in 2009, there were 23,000 homes to rent. Availability in Dublin remains very low, with just 1,100 homes on the market at the start of May, compared to an average of 3,800 in the years 2006-15.

"The severe shortage of rental accommodation has worsened in the last three months, a phenomenon reflected in rapidly rising rents in all parts of the country," said Ronan Lyons, economist at Trinity College Dublin and author of the Daft report.

“With the formation of a new Government, a top priority must be to address the lack of housing of all kinds, including homes to rent. This involves understanding the costs of construction, which are out of line with average incomes.”

The average cost of renting a home in Dublin is now €1,464 while in Cork it is €1,003. Rent in Galway averages €900 while in Limerick it is €792. Waterford is the cheapest of the main urban centres where the average rent is €687. The average across the rest of the State is €708.