Foreign nationals are being deterred from working here by soaring rents and a shortage of private rental accommodation, posing a serious threat to employment targets set out in the National Development Plan.

These are among the conclusions of a new report on the apartment market by Hooke & MacDonald. The report, which points to the need for an influx of 30,000 migrants per year up to 2005, calls for a reversal of Government anti-investor measures to reverse the falling supply.

Since the measures of the first Bacon report were introduced in 1998, rents have spiralled by 75 per cent for a one-bedroom apartment and by 73 per cent for two-bedroom units in Dublin. Last year alone saw an increase of more than 25 per cent, averaging £700 per month for a one-bedroom apartment and £950 per month for a two-bedroom apartment. Those figures are expected to rise by a minimum of 24 per cent over 2001, hitting an average of £1,180 for two-beds.

Carina Warner of Hooke & MacDonald's lettings department noticed an increase in the number of foreign workers returning to their own countries when their contracts ended at Christmas.

"Many of them were working in the computer industry and on good salaries but feel too much of their money is going on rent and they'd be better off living back home."

Calling for "an early restoration" of mortgage interest relief and a lowering of stamp duty levels, the report says that surveys show that investors are not in competition with first-time buyers, who tend to purchase in the suburbs.

The Government has "cherry picked" the recommendations of the Commission on the Private Rented Residential Sector and "barely touched the supply side", says Hooke and MacDonald's Ken MacDonald.

"Tenants are the people being worst hit at the moment. The investors can put their money in commercial ventures or buy property abroad. The Finance Bill represents the next opportunity to fix the problem."