Successfully reported this slideshow.

Irish Residential Rent Analysis

1

Share

1 of 48
1 of 48

Irish Residential Rent Analysis

1

Share

Download to read offline

The purpose of this analysis is to assess trends in residential renting and rent prices.

This is a macro-level analysis based on a variety of publically available data sources.

The issue of prices for rental property in Ireland and, more particularly in Dublin and the other larger cities, and their rate of increase have dominated property-related discussions.

The data publically available on residential renting is patch, disparate and, in some case, of poor quality.

All the rent indices demonstrate the same pattern of increase.

Demand for rental properties is driven by increased population. A large part of the population increase in the renting age groups is due to net immigration who almost exclusively rent. It may also be that the recorded population number underestimates the actual population and thus the actual demand for rented accommodation

Most renters are aged between 25 to 44 – 60.7% in 2011 and 60.5% in 2016.

Nationally private landlords accounted for 68.0% of lettings in 2011 and 65.9% in 2016. In Dublin private landlords accounted 71.1% in 2011 and 69.3% in 2016.

RTB has records for 124,574 tenancies in the Dublin area with 272,981 bedrooms in March 2017. This excludes Local Authorities and a range of holiday, informal and family property lettings. The number of tenancies registered with the RTB has increased slightly indicating no drop in supply.

In the five and half years from Jun 2012 to Dec 2017, the number of BTL mortgages dropper by 27,821 or 18.52%. The number of repossessions in the interval was 4,897. So the number of BTL mortgages is dropping. This may be due to the group of people to who this lending relates – accidental landlords – selling their investment properties.

The last 10 years has seen the growth of the institutional residential property investor, especially in Dublin. Around 75% of large-scale multiple unit residential property purchases occurred in Dublin. These probably represent around 9,500 residential units. This represents a significant change in the rental sector, especially in Dublin.

There is a belief that residential institutional letters change a higher rent than other residential landlords. This may be one driver of increased rents.

In the last nine years, only 15,408 new property purchases were registered in Dublin. This illustrates the lack of new property supply in Dublin to accommodate a growing population and a demand for rental accommodation.

Airbnb rentals represent only 2.45% of the 124,574 registered tenancies and 2.08% of the 272,981 bedrooms in those tenancies and so is not significant.

Problems with availability and affordability of suitable residential rental accommodation represents a potential systemic economic risk.

The purpose of this analysis is to assess trends in residential renting and rent prices.

This is a macro-level analysis based on a variety of publically available data sources.

The issue of prices for rental property in Ireland and, more particularly in Dublin and the other larger cities, and their rate of increase have dominated property-related discussions.

The data publically available on residential renting is patch, disparate and, in some case, of poor quality.

All the rent indices demonstrate the same pattern of increase.

Demand for rental properties is driven by increased population. A large part of the population increase in the renting age groups is due to net immigration who almost exclusively rent. It may also be that the recorded population number underestimates the actual population and thus the actual demand for rented accommodation

Most renters are aged between 25 to 44 – 60.7% in 2011 and 60.5% in 2016.

Nationally private landlords accounted for 68.0% of lettings in 2011 and 65.9% in 2016. In Dublin private landlords accounted 71.1% in 2011 and 69.3% in 2016.

RTB has records for 124,574 tenancies in the Dublin area with 272,981 bedrooms in March 2017. This excludes Local Authorities and a range of holiday, informal and family property lettings. The number of tenancies registered with the RTB has increased slightly indicating no drop in supply.

In the five and half years from Jun 2012 to Dec 2017, the number of BTL mortgages dropper by 27,821 or 18.52%. The number of repossessions in the interval was 4,897. So the number of BTL mortgages is dropping. This may be due to the group of people to who this lending relates – accidental landlords – selling their investment properties.

The last 10 years has seen the growth of the institutional residential property investor, especially in Dublin. Around 75% of large-scale multiple unit residential property purchases occurred in Dublin. These probably represent around 9,500 residential units. This represents a significant change in the rental sector, especially in Dublin.

There is a belief that residential institutional letters change a higher rent than other residential landlords. This may be one driver of increased rents.

In the last nine years, only 15,408 new property purchases were registered in Dublin. This illustrates the lack of new property supply in Dublin to accommodate a growing population and a demand for rental accommodation.

Airbnb rentals represent only 2.45% of the 124,574 registered tenancies and 2.08% of the 272,981 bedrooms in those tenancies and so is not significant.

Problems with availability and affordability of suitable residential rental accommodation represents a potential systemic economic risk.

More Related Content

More from Alan McSweeney

Related Books

Free with a 14 day trial from Scribd

See all

Irish Residential Rent Analysis

  1. 1. Irish Residential Rent Analysis An analysis of the state of and the trends affecting residential property rental in Ireland and especially in Dublin Alan McSweeney June 2018 http://ie.linkedin.com/in/alanmcsweeney
  2. 2. Irish Residential Rent Analysis Page 2 Contents Introduction.......................................................................................................................................... 3 Rent Data Sources................................................................................................................................. 3 Who Rents Nationally And In Dublin?.................................................................................................. 6 National Renter Profile...................................................................................................................... 7 Dublin Renter Profile ........................................................................................................................ 9 Numbers of Rental Units..................................................................................................................... 12 RTB Number of Registered Tenancies ............................................................................................. 13 Central Bank Buy To Let (BTL) Mortgages ..................................................................................... 16 BPFI Residential Investment Lending (RIL) Mortgages.................................................................. 17 Rent Indices........................................................................................................................................ 21 CSO Consumer Price Index .............................................................................................................. 22 Combining the Rent Indices............................................................................................................. 23 Rent Amounts ................................................................................................................................. 24 Rent Projections.................................................................................................................................. 28 Rent Index Projections.................................................................................................................... 28 Linking Rent Price Changes to Changes in the Consumer Price Index............................................... 30 Daft Rent Index Notes ........................................................................................................................ 32 How Many Renters Are There?............................................................................................................ 35 What Is The Effect Of Airbnb On The Residential Rental Market?...................................................... 41 The Rise of the Institutional Residential Property Letting Investor .................................................... 42 What is The Future for Renting and Renters? ..................................................................................... 45 Summary............................................................................................................................................. 47
  3. 3. Irish Residential Rent Analysis Page 3 Introduction The purpose of this analysis is to assess trends in residential renting and rent prices. This is a macro-level analysis based on a variety of publically available data sources. The issue of prices for rental property in Ireland and, more particularly in Dublin and the other larger cities, and their rate of increase have dominated property-related discussions. The purpose of this brief analysis is not to discuss the rights and wrongs of rental prices and their increases. It is to look at the data to verify the consistency of the views they present. Rent Data Sources This analysis aggregates data from multiple sources to attempt to create a more complete picture of renting in Ireland. Schematically, the main sources of data used in this analysis are: These sources of publically-available rental data are:  Daft.ie – report published quarterly from Q4 2006 onwards in PDF format on the asking prices for rental properties advertised on the Daft.ie website. The report contains a national rent index for all locations and property types from Jan 20072 onwards (though no one report contains the full time series and the index baseline changes from 2007 and 2012) and asking prices for various types of rental property for various locations for the individual quarter. Current and historical reports are available from https://www.daft.ie/report. Daft is a commercial property web site and presumably
  4. 4. Irish Residential Rent Analysis Page 4 uses its rent index to develop and maintain its brand. See page 32 for more details on the issues and inconsistencies with the Daft rental index.  Central Statistics Office (CSO) – the relevant CSO data 1. The consumer price index time series is available at http://www.cso.ie/px/pxeirestat/Database/eirestat/Consumer%20Prices%20Monthly%20Series/C onsumer%20Prices%20Monthly%20Series_statbank.asp . The most relevant one is the monthly time series CPM15: Harmonised Consumer Price Index by Commodity Group, Month and Statistic http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=CPM15&PLanguag e=0. This contains an overall consumer price index and individual sub-indices based on the UN COICOP classification (Classification of Individual Consumption According to Purpose). The CPI data starts in Jan 1996. More details on the UN COICOP (Classification of Individual Consumption According to Purpose) classification are available from https://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=5. The relevant code for rent is COICOP code 04.1 – see https://unstats.un.org/unsd/cr/registry/regcs.asp?Cl=5&Lg=1&Co=04.1. 2. Housing profile information from the 2011 and 2016 census is available from https://www.cso.ie/px/pxeirestat/Database/eirestat/Profile%201%20- %20Housing%20in%20Ireland/Profile%201%20-%20Housing%20in%20Ireland_statbank.asp 3. Annual population estimates are available at https://www.cso.ie/px/pxeirestat/Database/eirestat/Annual%20Population%20Estimates/Annua l%20Population%20Estimates_statbank.asp  Residential Tenancies Board (RTB) – they publish a number of sets of data, again in different formats and with different content 1. An historical list of all registered tenancies downloadable for 47 individual regions in XLS format available from https://portal.rtb.ie/public_registrations_dublin.aspx. This is a point-in-time snapshot and does not contain historical data. The information is not available from published links on the RTB web site. The RTB no longer publish this data. It was last updated on 25 Mar 2017. 2. Monthly, quarterly and annual time series from the end of 2017 that contain the rental amount paid classified by property type, number of bedrooms and location available from http://www.cso.ie/px/pxeirestat/Database/eirestat/Residential%20Tenancies%20Board%20(RT B)/Residential%20Tenancies%20Board%20(RTB)_statbank.asp. 3. Quarterly rent index published in PDF format that contains a national rent index where the value at 2007Q3 is 100 available from https://onestopshop.rtb.ie/images/uploads/Comms%20and%20Research/RTB_Rent_Index_2017 _Q3_Final.pdf.  Banking and Payments Federation of Ireland (BPFI) – they publish information on mortgages including buy-to-let mortgages at https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/
  5. 5. Irish Residential Rent Analysis Page 5  Central Bank – they publish information on mortgage arrears including buy-to-let mortgages at https://www.centralbank.ie/statistics/data-and-analysis/credit-and-banking-statistics/mortgage- arrears  Property Services Regulatory Authority (PRSA) – they publish a register of property purchases from January 2012 - https://www.propertypriceregister.ie/website/npsra/pprweb.nsf/page/ppr-home-en  AirBnB - Inside Airbnb publish details on AirBnB listings for Dublin. The latest data is available for 18 February, 2017 - http://insideairbnb.com/get-the-data.html However, there are substantial data issues and data gaps that make compiling a complete view problematic. The intervals covered by these data sources are: BPFI Central Bank BTL RTB Rent Index Daft Rent Index RTB Detailed Tenancies PRSA Property Price Register Inside Airbnb CSO CPI CSO Census 2003 Q1 2003 Q2 2003 Q3 2003 Q4 2004 Q1 2004 Q2 2004 Q3 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4
  6. 6. Irish Residential Rent Analysis Page 6 2008 Q1 2008 Q2 2008 Q3 2008 Q4 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 The purpose of looking at this wider set of information is to attempt to build a more complete view of who rents in Ireland (and more specifically Dublin), what are the trends in rent prices and numbers of rental properties) and what are the trends in demand for rental properties. Who Rents Nationally And In Dublin? Information of the profile of renters provides a context for the subsequent analysis. The only public source for numbers of renters by age group is the census. The CSO time series E1016: Private Households in Permanent Housing Units 2011 to 2016 by Nature of Occupancy, Aggregate Town or Rural Area, Age Group of Reference Person, County and City and Census Year https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=E1016&PLanguage=0 contains details on numbers of renters by age group. The information is only available for the 2011 and 2016 census. The renter age group is based on the age of the person who is deemed to be the head of the household.
  7. 7. Irish Residential Rent Analysis Page 7 National Renter Profile The national profile of renters and owner-occupiers for 2011 and 2016 is: 2011 2016 This profile excludes the (small) numbers who occupy properties rent-free and those who did not provide a response. The key differences between the 2011 and 2016 numbers are the proportions in the age groups 25-29, 30- 34 and 35.35 that rent or are owner-occupiers. Age Group 2011 2016 Difference Mortgage Rented Mortgage Rented Mortgage Rented 25 - 29 Years 26.15% 67.35% 11.76% 73.37% -55.03% 8.94% 30 - 34 Years 48.60% 45.20% 32.41% 56.02% -33.31% 23.94% 35 - 39 Years 59.58% 32.07% 49.44% 39.59% -17.02% 23.45% The proportions at these age groups that rent or have mortgages do not tell the complete picture. The following table lists the numbers in the groups and the total population1 at these ages for the 2011 and 2016 census. Bear in mind that these numbers are now over two years old. Age Group 2011 2016 Mortgage Rented Total Households Population Mortgage Rented Total Households Population 25 - 29 Years 33,318 85,826 119,144 361,122 10,373 64,695 75,068 297,435 30 - 34 Years 89,612 83,353 172,965 393,945 50,809 87,834 138,643 361,975 35 - 39 Years 110,494 59,470 169,964 364,261 95,274 76,309 171,583 389,421 Total 233,424 228,649 462,073 1,119,328 156,456 228,838 385,294 1,048,831 1 The population numbers are taken from https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=EY006&PLanguage=0.
  8. 8. Irish Residential Rent Analysis Page 8 The total population in the three age groups fell by just over 6%. The total number of mortgage holders aged 25 – 29 fell by 22,945. People are renting longer and buying properties later. This results in an increased demand for rental properties. The national rental numbers and relative proportions are: Age Group 2011 2016 Under 25 Years 47,359 10.5% 31,103 6.6% 25 - 29 Years 85,826 19.1% 64,695 13.8% 30 - 34 Years 83,353 18.5% 87,834 18.7% 35 - 39 Years 59,470 13.2% 76,309 16.2% 40 - 44 Years 44,147 9.8% 55,418 11.8% 45 - 49 Years 34,331 7.6% 41,670 8.9% 50 - 54 Years 26,833 6.0% 32,228 6.9% 55 - 59 Years 20,938 4.7% 25,157 5.4% 60 - 64 Years 16,325 3.6% 19,283 4.1% 65 Years And Over 30,770 6.8% 35,974 7.7% Total 449,352 469,671 2011 2016 According to the census, nationally the number of renters increased by 3.5% between 2011 and 2016. Most renters are aged between 25 and 44 – 60.7% in 2011 and 60.5% in 2016. Age Group 2011 2016 Rented From Private Landlord 305,377 68.0% 309,728 65.9% Rented From A Local Authority 129,033 28.7% 143,1782 30.5% Rented From A Voluntary Body 14,942 3.3% 16,765 3.6% 2 This number closely agrees with the number of Local Authority rentals of 141,504 listed in Department of Housing, Planning and Local Government Local authority rented sector activity http://www.housing.gov.ie/node/6335 LA rented stock by area 2014 to date.
  9. 9. Irish Residential Rent Analysis Page 9 Total 449,352 469,671 2011 2016 Over two third of rental accommodation is provided by private landlords. Dublin Renter Profile The Dublin profile of renters and owner-occupiers for 2011 and 2016 is: 2011 2016 This profile excludes the (small) numbers who occupy properties rent-free and those who did not provide a response. As with the national numbers, the key differences between the 2011 and 2016 numbers are the proportions in the age groups 25-29, 30-34 and 35.35 that rent or are owner-occupiers.
  10. 10. Irish Residential Rent Analysis Page 10 Age Group 2011 2016 Difference Mortgage Rented Mortgage Rented Mortgage Rented 25 - 29 Years 20.22% 74.09% 9.47% 75.88% -53.18% 2.42% 30 - 34 Years 40.28% 54.74% 27.48% 61.76% -31.79% 12.83% 35 - 39 Years 53.01% 41.25% 43.20% 46.44% -18.51% 12.57% The proportions at these age groups that rent or have mortgages do not tell the complete picture. The following table lists the numbers in the groups and the total population at these ages for the 2011 and 2016 census. Bear in mind that these numbers are now over two years old. Age Group 2011 2016 Mortgage Rented Total Households Population Mortgage Rented Total Households Population 25 - 29 Years 9,210 16,288 25,498 125,281 3,174 10,872 14,046 111,569 30 - 34 Years 24,393 33,740 58,133 127,173 14,619 25,438 40,057 123,426 35 - 39 Years 28,830 33,148 61,978 104,301 25,670 32,860 58,530 120,544 Total 62,433 83,176 145,609 356,755 43,463 69,170 112,633 355,539 The total population in the three age groups fell by just over 0.3%. The total number of mortgage holders aged 25 – 29 fell by 6,036. People are renting longer and buying properties later. This results in an increased demand for rental properties. The Dublin rental numbers and relative proportions across the four Dublin areas of Dublin City, Dún Laoghaire-Rathdown, Fingal and South Dublin are: Age Group 2011 2016 Under 25 Years 16,288 9.9% 10,872 6.6% 25 - 29 Years 33,740 20.5% 25,438 15.4% 30 - 34 Years 33,148 20.2% 32,860 19.9% 35 - 39 Years 22,435 13.6% 27,593 16.7% 40 - 44 Years 15,474 9.4% 19,152 11.6% 45 - 49 Years 11,616 7.1% 13,540 8.2% 50 - 54 Years 8,915 5.4% 10,151 6.1% 55 - 59 Years 6,970 4.2% 7,911 4.8% 60 - 64 Years 5,529 3.4% 6,071 3.7% 65 Years And Over 10,372 6.3% 11,548 7.0% Total 164,487 165,136
  11. 11. Irish Residential Rent Analysis Page 11 2011 2016 The renters in Dublin represented 36.7% of the national number in 2011 and 35.3% in 2016. According to the census, nationally the number of renters increased by 0.5% between 2011 and 2016. As with the national numbers, most renters are aged between 25 and 44 – 63.5% in 2011 and 63.4% in 2016. Age Group 2011 2016 Rented From Private Landlord 116,935 71.1% 114,462 69.3% Rented From A Local Authority 42,534 25.9% 44,6843 27.1% Rented From A Voluntary Body 5,018 3.1% 5,990 3.6% Total 164,487 165,136 2011 2016 3 This number closely agrees with the number of Local Authority rentals of 46,712 for the four Dublin Local Authority areas listed in Department of Housing, Planning and Local Government Local authority rented sector activity http://www.housing.gov.ie/node/6335 LA rented stock by area 2014 to date.
  12. 12. Irish Residential Rent Analysis Page 12 Over two third of rental accommodation is provided by private landlords. Numbers of Rental Units The core determining factors in the price of a commodity are its supply and its demand. Demand for rental units comes from people and is affected by demographic factors:  Immigrants, students and workers moving temporarily to a location will tend to rent rather than buy  It was more common for people leaving the parental home to buy but this is becoming less common – according to the following paper published by the Central bank of Ireland4, the average age of the first time buyer average age in 2016 and 2017 was 34 years. The supply of rental properties can come from a number of sources: Source of Rental Property Source(s) of Data 1. Private Landlords a. Existing rental properties owned by a private landlord The RTB used to publish a list of all registered tenancies. The most recently data available dates from March 2017. The data includes registered tenancies. It does not include Local Authority rentals and informal tenancies. b. Rental properties bought by private landlords i. Properties bought with a mortgage High-level information is available from the BPFI and the Central Bank. ii. Properties bought with cash The details of residential property purchases are available in the Property Price Register. Identifying those bought for cash for letting would require matching the register data with the RTB detailed tenancy data. 2. Commercial Landlords a. Existing rental properties owned by a commercial landlord The RTB used to publish a list of all registered tenancies. The most recently data available dates from March 2017. b. Rental properties bought by commercial landlords The details of residential property purchases are available in the Property Price Register. Identifying those bought for cash for letting would require matching the register data with the RTB detailed tenancy data. 3. Properties rented by Local Authorities The Department of Housing, Planning and Local Government publish high-level data. 4. Properties rented by Voluntary Bodies The RTB used to publish a list of all registered tenancies. The most recently data available dates from March 2017. 4 https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-1-2018-macroprudential- measures-and-irish-mortgage-lending-an-overview-of-2017-(kinghan-lyons-mazza).pdf
  13. 13. Irish Residential Rent Analysis Page 13 RTB Number of Registered Tenancies The number of tenancies registered by the RTB for counties outside Dublin in March 2017 was: County Number of Registered Tenancies Number of Bedrooms Carlow 3,804 10,799 Cavan 2,822 7,895 Clare 4,612 13,031 Cork 34,475 90,563 Donegal 6,608 19,077 Galway 18,755 53,638 Kerry 7,563 21,420 Kildare 11,799 31,206 Kilkenny 4,227 11,573 Laois 3,618 10,054 Leitrim 1,551 4,384 Limerick 13,553 37,324 Longford 2,505 6,982 Louth 6,604 17,609 Mayo 6,050 17,258 Meath 7,486 20,448 Monaghan 1,940 5,184 Offaly 3,200 8,746 Roscommon 2,925 8,763 Sligo 5,517 15,678 Tipperary 7,384 19,844 Waterford 8,213 21,457 Westmeath 6,414 16,962 Wexford 8,369 22,284 Wicklow 6,666 16,868 Total 186,660 509,047 In 2016, the number of renting households nationally recorded by the census was 469,671 (see page 8). The number of Dublin renting households was 165,136 (see page 11). So the number of renting households outside Dublin in 2016 was 304,535. This includes Local Authority Numbers. Excluding these the number of renting households outside Dublin in 2016 was 206,041. This is higher than the number of tenancies registered with the RTB. This could indicate a higher level of non-compliance with RTB registration or a high level of informal tenancies or both. The RTB maintained details on registered tenancies in the following Dublin areas:
  14. 14. Irish Residential Rent Analysis Page 14 According to the detailed RTB data from March 2017, the numbers of registered tenancies for the various Dublin regions was: Dublin Area Number of Registered Tenancies Number of Bedrooms Dublin 1 7,133 11,624 Dublin 2 3,996 6,952 Dublin 3 4,292 8,524 Dublin 4 8,297 16,505 Dublin 5 1,845 4,420 Dublin 6 11,163 20,614 Dublin 7 7,745 14,413 Dublin 8 11,484 20,355 Dublin 9 5,107 17,380 Dublin 10 620 1,349 Dublin 11 3,220 7,187 Dublin 12 2,723 6,396 Dublin 13 2,309 6,045 Dublin 14 3,348 8,446 Dublin 15 8,472 21,479 Dublin 16 1,841 4,745 Dublin 17 702 1,482 Dublin 18 5,174 11,700 Dublin 20 802 1,842 Dublin 22 1,438 3,595 Dublin 24 5,307 12,413 Co Dublin 27,556 65,515 Total 124,574 272,981
  15. 15. Irish Residential Rent Analysis Page 15 The number of Dublin renting households was 165,136 (see page 11). This includes Local Authority Numbers. Excluding these the number of renting households outside Dublin in 2016 was 120,452. This is very close to the number of registered RTB tenancies. Most privately rented properties and properties rented out by housing associations must be registered with the RTB. The number of tenancies registered with the RTB does not correlate with the number of properties. There can be multiple tenancies for the same property. The quality of the detailed RTB tenancy data is poor. There is a cost to register a tenancy with the RTB so presumably it is reasonable to assume if a property is no longer available to be rented, it tenancy will not be continued and will lapse. There will be a lag where the property is still registered up to the renewal date when it will lapse. On the other hand there will be tenancies that are should be but are not registered with the RTB5. The following classes of property lettings do not have to be registered with the RTB:  Holiday lettings  Business lettings  Owner-occupied letters where a room in a property is let  Informal family lettings  Social housing provided by local authorities The following table gives the number of registered tenancies for the Dublin postal districts and excludes the County Dublin area for March 2017, August 2014 and July 2012. Older information on registered tenancies provided the number of bedrooms and the number of bed spaces. The following table lists the number of registered tenancies in March 2017, August 2014 and July 2012 for the Dublin postal districts (excluding County Dublin). March 2017 August 2014 July 2012 Dublin Area Number of Registered Tenancies Number of Bedrooms Number of Registered Tenancies Number of Bedrooms Number of Bed Spaces Number of Registered Tenancies Number of Bedrooms Number of Bed Spaces Dublin 1 7,133 11,624 6,762 11,157 19,108 7,249 12,473 21,124 Dublin 2 3,996 6,952 3,848 6,718 11,406 3,983 7,048 11,853 Dublin 3 4,292 8,524 4,131 8,089 12,950 4,134 8,391 13,430 Dublin 4 8,297 16,505 7,627 15,031 25,297 7,253 14,622 24,208 Dublin 5 1,845 4,420 1,589 4,081 6,167 1,586 4,171 6,387 Dublin 6 11,163 20,614 10,370 19,114 29,800 10,600 20,411 30,752 5 National Oversight and Audit Commission Rented Houses Inspections A Review of Local Authority Performance of Private Rented Houses Regulations Functions http://noac.ie/wp-content/uploads/2016/11/NOAC-Private- Rented-Sector-Review.pdf Page 5 "While there is no reliable estimate of the level of unregistered tenancies, some authorities believe that not all tenancies in their area are registered. Since enforcement of the registration requirement is a function of the Residential Tenancies Board, authorities should draw that agency’s attention to any cases encountered."
  16. 16. Irish Residential Rent Analysis Page 16 Dublin 7 7,745 14,413 7,236 13,354 21,318 7,120 13,575 21,464 Dublin 8 11,484 20,355 9,967 17,884 29,998 9,731 17,786 29,188 Dublin 9 5,107 17,380 4,720 11,369 17,175 4,650 11,297 17,132 Dublin 10 620 1,349 452 1,000 1,551 404 883 1,364 Dublin 11 3,220 7,187 3,064 6,826 10,979 2,867 6,476 10,305 Dublin 12 2,723 6,396 2,452 5,936 9,295 2,308 5,601 8,772 Dublin 13 2,309 6,045 1,902 4,909 7,998 1,714 4,278 7,035 Dublin 14 3,348 8,446 3,027 7,740 12,260 3,146 8,180 13,035 Dublin 15 8,472 21,479 7,993 20,645 32,816 8,027 20,869 33,775 Dublin 16 1,841 4,745 1,662 4,369 6,917 1,643 4,460 7,075 Dublin 17 702 1,482 523 1,177 1,885 590 1,335 2,247 Dublin 18 5,174 11,700 4,484 10,332 17,470 3,627 8,678 14,602 Dublin 20 802 1,842 770 1,771 2,834 665 1,550 2,446 Dublin 22 1,438 3,595 1,583 3,970 6,249 2,086 5,254 8,236 Dublin 24 5,307 12,413 4,417 10,543 17,143 4,230 10,144 16,469 Total 97,018 207,466 88,579 186,015 300,616 87,613 187,482 300,899 A large part of the increase of 8,439 in the number of registered and of 21,451 in the number of bedrooms provided by those tenancies from August 2014 to March 2017 is likely due to changes that happened with the RTB in 2016 when approved housing bodies (housing associations) were obliged to register their tenancies. As you can see from the information on page 11, in the 2016 census there were 5,990 units classified as Rented From A Voluntary Body. So the number of registered tenancies, allowing for the 2016 registration policy change, has not changed significantly. It has increased slightly. But it has not decreased. The average number of bedrooms per registered tenancy was between 2.10 and 2.14. This indicates that most tenancies were for 2-bedroom apartments with a smaller number for 1-bedroom apartments and 3- bedroom and larger apartments and houses. Central Bank Buy To Let (BTL) Mortgages The latest Central Bank BTL mortgage information relates to December 20176. This information is published nationally. While this information is compiled for the purposes of assessing mortgage arrears, it can provide an insight into the number of BTL mortgages. Quarter Number of BTL Mortgages Average Mortgage Balance Quarter on Quarter Decrease Jun 2012 150,187 208,092 Sep 2012 150,544 206,263 -357 Dec 2012 150,124 207,552 420 Mar 2013 149,395 206,965 729 Jun 2013 148,529 206,196 866 Sep 2013 147,610 205,542 919 Dec 2013 145,528 203,859 2,082 6 https://www.centralbank.ie/statistics/data-and-analysis/credit-and-banking-statistics/mortgage-arrears
  17. 17. Irish Residential Rent Analysis Page 17 Quarter Number of BTL Mortgages Average Mortgage Balance Quarter on Quarter Decrease Mar 2014 144,686 202,978 842 Jun 2014 144,187 202,215 499 Sep 2014 143,354 201,057 833 Dec 2014 140,995 198,641 2,359 Mar 2015 139,206 196,417 1,789 Jun 2015 137,303 194,174 1,903 Sep 2015 137,805 191,783 -502 Dec 2015 137,504 189,234 301 Mar 2016 136,295 187,997 1,209 Jun 2016 134,994 186,807 1,301 Sep 2016 132,571 185,663 2,423 Dec 2016 130,710 183,881 1,861 Mar 2017 128,149 182,753 2,561 Jun 2017 126,995 181,419 1,154 Sep 2017 124,702 180,674 2,293 Dec 2017 122,366 179,350 2,336 In the five and half years of this interval, the number of BTL mortgages dropper by 27,821 or 18.52%. The number of repossessions in the interval was 4,897. So the number of BTL mortgages is dropping. This may be due to the group of people to who this lending relates – accidental landlords – selling their investment properties. BPFI Residential Investment Lending (RIL) Mortgages This lending relates to individuals borrowing to fund mortgages for letting7. It is published quarterly from 2003 Q1. The latest interval is 2018 Q1. They are published nationally. In the 16 years of this interval there were 143,894 such mortgages. Only a subset of the total properties bought by individuals will have been bought with a mortgage. The following chart aggregates the individual quarterly numbers of RIL mortgages, the cumulative number of RIL mortgages and the number of BTL mortgages outstanding counted by the Central Bank. 7 https://www.bpfi.ie/publications/bpfi-mortgage-drawdowns/
  18. 18. Irish Residential Rent Analysis Page 18 The trends from this are clear:  Large-scale lending for residential investment properties started in 2003, peaked in 2006 and started to fall rapidly from 2007 to 2009. It has remained at very low rates since then – of the order of 300 per quarter.  The number of outstanding buy-to-let mortgages had reduced by 18.5% since measurement data became available. This lack of investment in new residential letting combined with a drop in outstanding mortgages indicates a reduction in the number of private properties being bought and then available for rent. The BPFI data can be combined with the PRSA property price register data to get a view of the number of properties bought with mortgages and the number of new properties. While the BPFI data is available from the start of 2003, the PRSA data is available from the start of 2010. The BPFI data is summarised nationally by quarter, The PRSA data contains individual transactions. Nationally the numbers of mortgages and properties bought from 2010 Q1 to 2018 Q1 were: Quarter Number of Mortgages Value of Mortgages (Millions) Number of Properties Bought Value of Properties Bought (Millions) New Properties 2010 Q1 6,954 1,220 4,213 1,082 1,206 2010 Q2 7,827 1,305 5,163 1,300 1,326 2010 Q3 7,261 1,239 5,961 1,444 1,392
  19. 19. Irish Residential Rent Analysis Page 19 Quarter Number of Mortgages Value of Mortgages (Millions) Number of Properties Bought Value of Properties Bought (Millions) New Properties 2010 Q4 5,624 982 5,627 1,270 1,380 2011 Q1 3,259 577 3,499 817 752 2011 Q2 3,551 624 4,123 886 751 2011 Q3 3,607 623 4,979 1,080 684 2011 Q4 3,856 639 5,800 1,174 762 2012 Q1 2,630 450 4,284 823 553 2012 Q2 3,225 524 5,376 995 623 2012 Q3 3,983 663 6,408 1,292 754 2012 Q4 6,043 999 9,261 1,794 1,234 2013 Q1 2,068 331 4,899 899 632 2013 Q2 3,229 518 6,284 1,248 669 2013 Q3 4,482 750 8,034 1,731 897 2013 Q4 5,206 896 10,806 2,280 1,544 2014 Q1 3,425 568 6,838 1,350 852 2014 Q2 4,803 820 9,197 1,855 1,237 2014 Q3 6,308 1,126 11,508 2,708 1,284 2014 Q4 7,583 1,341 16,001 3,438 2,028 2015 Q1 5,617 1,002 10,716 2,269 1,161 2015 Q2 6,120 1,091 11,638 2,463 1,935 2015 Q3 7,155 1,335 12,453 2,840 1,416 2015 Q4 7,993 1,438 14,227 3,234 1,705 2016 Q1 5,447 999 9,804 2,336 1,054 2016 Q2 6,803 1,286 11,605 2,736 1,613 2016 Q3 8,133 1,558 12,945 3,226 1,759 2016 Q4 9,115 1,813 15,281 3,868 2,381 2017 Q1 6,944 1,392 10,967 2,849 1,623 2017 Q2 7,998 1,648 12,556 3,172 2,126 2017 Q3 9,506 2,016 14,341 3,859 2,351 2017 Q4 10,350 2,230 16,528 4,618 3,174 2018 Q1 7,879 1,704 11,429 3,118 2,025 Total 193,984 35,706 302,751 70,056 44,883 In the interval there were over 100,000 property purchases in excess of the number of mortgages drawn down. The quarters for the numbers of mortgages and when properties were bought with those mortgages are not aligned. There will be a lag between when a mortgage is drawn down and when the property bought with that mortgage is registered with the PRSA. The following chart shows the cumulative number of mortgages and properties bought and their cumulative values. The numbers are shown on the left hand vertical axis in blue. The values are shown on the right hand vertical axis in orange.
  20. 20. Irish Residential Rent Analysis Page 20 It is interesting to note that while the number of properties bought is 50% greater than the number of mortgages drawn down, the value of the properties bought is 100% greater than the value of the mortgages drawn down. One cause of this is large scale property purchases counted as single transactions –see page 42 for more information on this. The quality of the PRSA property price register data is quite poor. For example, there are 52 transactions with a value of €10 million or greater with a combined value of $1.456 billion. These correspond to the purchase of multiple units registered as a single property. The details on the properties bought in Dublin since 2010 by quarter are: Quarter Number Bought Value of Properties Bought (Millions) Number New Bought 2010 Q1 1,429 €490 301 2010 Q2 1,808 €636 322 2010 Q3 2,001 €665 341 2010 Q4 1,694 €518 369 2011 Q1 1,080 €354 165 2011 Q2 1,260 €390 154 2011 Q3 1,670 €533 170 2011 Q4 1,889 €548 193 2012 Q1 1,434 €416 177 2012 Q2 1,942 €502 159 2012 Q3 2,336 €679 265 2012 Q4 3,199 €904 360 2013 Q1 1,584 €450 189 2013 Q2 2,058 €679 164 2013 Q3 2,870 €996 294 2013 Q4 3,860 €1,266 551 2014 Q1 2,192 €728 237 2014 Q2 2,917 €992 295
  21. 21. Irish Residential Rent Analysis Page 21 Quarter Number Bought Value of Properties Bought (Millions) Number New Bought 2014 Q3 3,812 €1,558 355 2014 Q4 5,244 €1,852 794 2015 Q1 3,473 €1,149 324 2015 Q2 4,062 €1,329 932 2015 Q3 3,815 €1,440 438 2015 Q4 4,072 €1,497 470 2016 Q1 3,226 €1,228 342 2016 Q2 3,498 €1,424 552 2016 Q3 4,152 €1,693 682 2016 Q4 4,862 €2,028 926 2017 Q1 3,600 €1,475 706 2017 Q2 3,938 €1,583 881 2017 Q3 4,737 €2,010 1,027 2017 Q4 5,486 €2,419 1,417 2018 Q1 3,852 €1,612 856 Total 99,052 €36,042 15,408 In the greater than 9 years represented by this data, only 15,408 new property purchases were registered in Dublin. This illustrates the lack of new property supply in Dublin to accommodate a growing population and a demand for rental accommodation. The Department of Housing, Planning and Local Government produce statistics on new connections to the electricity network8. The number of new residential connections to the electricity network in the Dublin area from 2010 onwards was 23,880. ESB Networks will typically de-energise (disconnect from the electricity supply network) after it has been unoccupied and no usage recorded for six months. So new connections to the electricity network do represent properties that have come back on the market. But they do not represent newly built houses. Rent Indices I have used the following indices of rent-related costs in this section:  CSO Consumer Price Index – monthly from January 1996 to December 2017  CSO Rent Price Component of Consumer Price Index – monthly from January 1996 to December 2017 – the CSO publish two price time series that include a rental component o CPM15 Harmonised Consumer Price Index by Commodity Group, Month and Statistic9 o CPM16 Consumer Price Index by Detailed Sub Indices, Statistic and Month10  RTB Rent Index – quarterly from Q3 2007 to Q3 2017 – the RTB publish three rent indices: 8 http://www.housing.gov.ie/housing/statistics/house-building-and-private-rented/construction-activity-esb- connections 9 https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=CPM15&PLanguage=0 10 https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=CPM16&PLanguage=0
  22. 22. Irish Residential Rent Analysis Page 22 o Overall o House o Apartment  Daft Index (see page 32 for some comments on this) – monthly from January 2006 to January 2018 I have used the national rent index values for this analysis. CSO Consumer Price Index This chart shows the CSO overall consumer price index11 and the rent portion of this index from January 1996 to April 2018. It is interesting to note that the rent price index consistently lagged behind the overall consumer price index, matching it in early 2002 and early 2008. It is only in August 2015 that the rent index starts to consistently exceed the consumer price index. From May 2003 to February 2005 rents fell. Similarly rents fell from May 2008 to November 2012. The following chart shows the overall RTB rent index12 overlaid onto the CSO price indices. I have changed the interval to start in September 2007. I have also converted the quarterly RTB national rent index data to monthly values by simple linear interpolation. The RTB rent index uses the right-hand vertical axis values. 11 CPM15: Harmonised Consumer Price Index by Commodity Group, Month and Statistic https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=CPM15&PLanguage=0 12 https://onestopshop.rtb.ie/research/ar. At the time of writing the latest RTB overall rent index value published was for 2017Q4.
  23. 23. Irish Residential Rent Analysis Page 23 Combining the Rent Indices The three RTB start in Q3 2007 at 100. The following displays the three RTB rent indices – overall, house and apartment, the two CSO rent consumer price indices and the Daft national rent index. While these five rent index all follow the same general trends, there are considerable differences. This chart just shows the trends. While the initial values for September 2009 have been standardised at 100 the actual values represented by this for each index are different. The greatest variation occurs with the CSO’s CPM15 Harmonised Consumer Price Index. The Daft rent index reaches the lowest relative point and, apart from CPM15, the highest relative point. This matches
  24. 24. Irish Residential Rent Analysis Page 24 the nature of the Daft rent index which is a leading indicator of rents based on asking prices for new lettings. As rents fell, the asking prices for new rents were lower and as rents increase the same asking prices are higher. Rent Amounts The RTB publish yearly, half-yearly and quarterly rent amount data. Daft publish similar quarterly data. The RTB data is classified by property type, number of beds and locations. The location dimension is quite granular. It currently has data up to Q4 2017. The structure of the property type and number of beds classification is: This classification occurs because property type and number of beds are represented by two dimensions rather than being consolidated into occurrences of combinations actual property types and rooms. The Daft property classification is:  1 bed apartment  2 bed house  3 bed house  4 bed house  5 bed house So the only overlapping property classification between the two sets of data is 1 bed apartment. The Daft property type classification also changed in Q3 2014. The time series currently runs to Q4 2017. This analysis looks at 1 bed apartments in the Dublin postal regions. The RTB data does not have an explicit classification for Dublin 22. It does have one sub-region within Dublin 22. The Daft data includes data for Dublin 22. For consistency, I have excluded this.
  25. 25. Irish Residential Rent Analysis Page 25 The RTB do not list any tenancies for 1 bed apartments in the Dublin 10 postal district. Daft have data for 1 bed apartments for this district. For consistency, I have excluded this. The RTB data includes actual amounts paid (or those amounts tenants say they are paying, which may be different) for all tenancies. The Daft data includes asking prices for new rentals. The RTB rent amounts for 1 bed apartments in Dublin postal districts excluding Dublin 22 is: 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 Dublin 1 €915 €941 €964 €981 €1,004 €1,022 €1,044 €1,066 €1,090 €1,112 €1,138 €1,155 €1,181 €1,225 Dublin 2 €1,059 €1,100 €1,123 €1,144 €1,163 €1,194 €1,203 €1,231 €1,278 €1,314 €1,332 €1,352 €1,356 €1,413 Dublin 3 €904 €916 €934 €947 €964 €982 €1,007 €1,030 €1,055 €1,089 €1,112 €1,138 €1,145 €1,194 Dublin 4 €1,119 €1,138 €1,164 €1,177 €1,202 €1,216 €1,250 €1,271 €1,296 €1,323 €1,353 €1,372 €1,375 €1,414 Dublin 5 €823 €863 €887 €893 €913 €922 €945 €954 €1,005 €1,041 €1,055 €1,070 €1,078 €1,084 Dublin 6 €988 €999 €1,017 €1,042 €1,069 €1,099 €1,128 €1,138 €1,158 €1,185 €1,212 €1,235 €1,259 €1,282 Dublin 6W €877 €904 €926 €955 €976 €986 €995 €1,020 €1,037 €1,050 €1,097 €1,123 €1,154 €1,198 Dublin 7 €844 €872 €896 €909 €944 €962 €972 €985 €1,018 €1,030 €1,046 €1,071 €1,093 €1,115 Dublin 8 €893 €913 €935 €962 €991 €1,017 €1,035 €1,054 €1,078 €1,110 €1,133 €1,156 €1,189 €1,232 Dublin 9 €826 €857 €867 €878 €906 €932 €956 €991 €1,009 €1,034 €1,057 €1,079 €1,102 €1,118 Dublin 10 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 Dublin 11 €825 €842 €850 €869 €876 €903 €924 €948 €970 €1,008 €1,022 €1,034 €1,070 €1,083 Dublin 12 €855 €870 €893 €899 €919 €932 €940 €988 €1,013 €1,048 €1,085 €1,096 €1,098 €1,110 Dublin 13 €865 €903 €925 €935 €949 €968 €998 €1,001 €1,016 €1,032 €1,049 €1,046 €1,086 €1,123 Dublin 14 €1,034 €1,064 €1,094 €1,102 €1,122 €1,140 €1,175 €1,183 €1,198 €1,210 €1,219 €1,230 €1,236 €1,305 Dublin 15 €878 €898 €908 €930 €951 €964 €982 €990 €1,009 €1,036 €1,049 €1,072 €1,100 €1,129 Dublin 16 €990 €1,000 €1,017 €1,104 €1,146 €1,182 €1,228 €1,244 €1,221 €1,228 €1,230 €1,250 €1,250 €1,255 Dublin 17 €866 €878 €887 €894 €899 €902 €921 €926 €946 €962 €998 €1,011 €1,032 €1,038 Dublin 18 €1,083 €1,112 €1,131 €1,145 €1,159 €1,178 €1,188 €1,233 €1,272 €1,343 €1,364 €1,378 €1,392 €1,408 Dublin 20 €847 €863 €863 €875 €907 €929 €938 €971 €1,016 €1,037 €1,040 €1,055 €1,033 €1,077 Dublin 24 €830 €850 €870 €892 €925 €943 €957 €972 €991 €1,019 €1,041 €1,050 €1,069 €1,073 The CSO published some very limited rent amount data in the 2016 census13. The following is an extract of the data for Dublin: Weekly Monthly 2011 2016 2011 2016 Flat Or Apartment In A Purpose- Built Block Rented From Private Landlord €219 €280 €949 €1,214 Rented From A Local Authority €64 €85 €276 €369 Rented From A Voluntary Body €87 €101 €376 €437 Flat/Apartment In A Converted Dwelling (Including Bed Sits) Rented From Private Landlord €160 €201 €693 €873 Rented From A Local Authority €76 €110 €328 €475 Rented From A Voluntary Body €84 €92 €366 €399 According to the CSO, the average monthly rent paid for an apartment in 2016 was €1,214. The average RTB price14 for apartments with one to two beds in Q2 2016 in Dublin was €1,225. The average apartments with one to three beds was €1,261. So the two sets of rental price data agree closely. 13 E1020 Average Weekly Rent of Rented Private Households in Permanent Housing Units 2011 to 2016 by Regional Authority, Nature of Occupancy, Type of Private Accommodation, Census Year and Statistic https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=E1020&PLanguage=0
  26. 26. Irish Residential Rent Analysis Page 26 The Daft rent asking amounts for 1 bed apartments in Dublin postal districts excluding Dublin 22 is: 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 Dublin 1 €915 €941 €964 €981 €1,004 €1,022 €1,044 €1,066 €1,090 €1,112 €1,138 €1,155 €1,181 €1,503 Dublin 2 €1,059 €1,100 €1,123 €1,144 €1,163 €1,194 €1,203 €1,231 €1,278 €1,314 €1,332 €1,352 €1,356 €1,750 Dublin 3 €904 €916 €934 €947 €964 €982 €1,007 €1,030 €1,055 €1,089 €1,112 €1,138 €1,145 €1,444 Dublin 4 €1,119 €1,138 €1,164 €1,177 €1,202 €1,216 €1,250 €1,271 €1,296 €1,323 €1,353 €1,372 €1,375 €1,868 Dublin 5 €823 €863 €887 €893 €913 €922 €945 €954 €1,005 €1,041 €1,055 €1,070 €1,078 €1,307 Dublin 6 €988 €999 €1,017 €1,042 €1,069 €1,099 €1,128 €1,138 €1,158 €1,185 €1,212 €1,235 €1,259 €1,617 Dublin 6W €877 €904 €926 €955 €976 €986 €995 €1,020 €1,037 €1,050 €1,097 €1,123 €1,154 €1,462 Dublin 7 €844 €872 €896 €909 €944 €962 €972 €985 €1,018 €1,030 €1,046 €1,071 €1,093 €1,432 Dublin 8 €893 €913 €935 €962 €991 €1,017 €1,035 €1,054 €1,078 €1,110 €1,133 €1,156 €1,189 €1,501 Dublin 9 €826 €857 €867 €878 €906 €932 €956 €991 €1,009 €1,034 €1,057 €1,079 €1,102 €1,351 Dublin 10 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €0 €1,227 Dublin 11 €825 €842 €850 €869 €876 €903 €924 €948 €970 €1,008 €1,022 €1,034 €1,070 €1,235 Dublin 12 €855 €870 €893 €899 €919 €932 €940 €988 €1,013 €1,048 €1,085 €1,096 €1,098 €1,313 Dublin 13 €865 €903 €925 €935 €949 €968 €998 €1,001 €1,016 €1,032 €1,049 €1,046 €1,086 €1,329 Dublin 14 €1,034 €1,064 €1,094 €1,102 €1,122 €1,140 €1,175 €1,183 €1,198 €1,210 €1,219 €1,230 €1,236 €1,448 Dublin 15 €878 €898 €908 €930 €951 €964 €982 €990 €1,009 €1,036 €1,049 €1,072 €1,100 €1,213 Dublin 16 €990 €1,000 €1,017 €1,104 €1,146 €1,182 €1,228 €1,244 €1,221 €1,228 €1,230 €1,250 €1,250 €1,292 Dublin 17 €866 €878 €887 €894 €899 €902 €921 €926 €946 €962 €998 €1,011 €1,032 €1,275 Dublin 18 €1,083 €1,112 €1,131 €1,145 €1,159 €1,178 €1,188 €1,233 €1,272 €1,343 €1,364 €1,378 €1,392 €1,448 Dublin 20 €847 €863 €863 €875 €907 €929 €938 €971 €1,016 €1,037 €1,040 €1,055 €1,033 €1,320 Dublin 24 €830 €850 €870 €892 €925 €943 €957 €972 €991 €1,019 €1,041 €1,050 €1,069 €1,222 The Daft amounts are consistently greater than the RTB amounts, which is to be expected given the different natures of the data – current actual prices being paid rather than current asking prices. The following table lists the percentage differences between the two indices, 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 Dublin 1 17.7% 15.8% 15.0% 11.5% 13.7% 7.9% 13.7% 16.0% 19.6% 23.1% 21.6% 23.9% 25.2% 22.7% Dublin 2 9.4% 12.4% 12.0% 18.8% 20.7% 13.5% 17.0% 18.7% 19.9% 22.4% 21.7% 23.4% 26.7% 23.9% Dublin 3 2.5% 7.4% 4.1% 16.0% 19.6% 12.9% 19.2% 20.3% 22.7% 23.5% 21.1% 20.7% 23.1% 21.0% Dublin 4 7.0% 10.0% 8.1% 20.7% 23.1% 17.1% 23.8% 26.7% 27.9% 29.6% 28.4% 28.4% 32.6% 32.1% Dublin 5 0.5% 13.4% 2.8% 7.1% 9.9% 5.7% 9.4% 13.4% 11.7% 13.3% 12.2% 13.3% 17.9% 20.6% Dublin 6 -3.8% 2.7% -0.9% 18.4% 21.2% 14.3% 15.0% 18.6% 22.1% 25.9% 24.3% 24.2% 25.3% 26.1% Dublin 6W 3.4% 6.6% 6.5% 17.1% 20.6% 15.2% 21.6% 23.4% 25.4% 29.5% 23.8% 22.2% 23.5% 22.1% Dublin 7 6.6% 3.7% 7.5% 13.0% 15.1% 9.3% 13.1% 16.7% 18.5% 24.3% 24.0% 24.2% 27.0% 28.5% Dublin 8 7.8% 9.0% 8.3% 11.8% 14.5% 8.2% 12.1% 15.3% 18.2% 21.4% 20.3% 20.8% 22.7% 21.8% Dublin 9 6.8% 6.1% 6.9% 12.1% 14.5% 8.0% 10.6% 11.2% 14.0% 16.1% 15.1% 15.5% 18.1% 20.8% Dublin 10 9.1% 12.4% 11.2% 4.1% 10.1% 2.8% 7.2% 9.7% 11.1% 12.0% 11.5% 11.9% 11.5% 14.0% Dublin 11 5.9% -1.3% 9.1% 5.6% 9.7% 4.6% 10.3% 10.1% 12.2% 13.3% 9.8% 11.2% 15.3% 18.3% Dublin 12 11.1% 10.1% 6.5% 3.5% 8.0% 2.4% 6.5% 11.2% 12.9% 16.1% 14.2% 17.4% 18.7% 18.3% Dublin 13 6.1% -3.5% 3.3% 0.9% 3.8% -0.6% 1.9% 6.0% 7.8% 10.6% 9.6% 9.1% 13.1% 10.9% Dublin 14 21.1% 21.5% 14.2% -4.7% -1.8% -6.1% -2.7% 0.9% 3.1% 4.9% 4.9% 4.8% 6.6% 7.4% Dublin 15 12.8% -10.0% 6.4% -6.8% -5.7% -11.1% -10.8% -8.8% -3.6% -0.4% -0.4% -1.0% 1.7% 2.9% Dublin 16 8.2% 12.8% 3.5% 8.9% 7.6% -1.5% 0.8% 3.0% 10.4% 9.3% 12.2% 16.3% 22.9% Dublin 17 2.0% 3.2% 0.6% -4.5% -0.3% -5.1% 0.7% 1.5% 1.5% -0.4% -1.8% -1.6% 1.0% 2.9% Dublin 18 36.7% 35.0% 13.1% 8.3% 11.5% 4.6% 10.4% 11.2% 9.0% 11.4% 13.0% 13.2% 23.2% 22.6% Dublin 20 8.1% 7.1% 6.1% -1.6% 1.1% -4.6% -0.3% 3.3% 5.3% 8.3% 6.9% 7.1% 10.4% 13.9% Dublin 24 17.7% 15.8% 15.0% 11.5% 13.7% 7.9% 13.7% 16.0% 19.6% 23.1% 21.6% 23.9% 25.2% 22.7% 14 RIQ02: RTB Average Monthly Rent Report by Property Type, Location, Number of Bedrooms and Quarter https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=RIQ02&PLanguage=0
  27. 27. Irish Residential Rent Analysis Page 27 The differences between the Daft recorded asking price and the current RTB recorded actual rent are variable. The trend is for the difference to become greater. This indicates accelerating asking prices that tends to indicate accelerating rents being charged. The following chart shows the range of differences:
  28. 28. Irish Residential Rent Analysis Page 28 So, if the Daft index data is a leading indicator of future rents, how long will it take for the asking prices to apply to the entire population of tenancies? The following table shows the number of quarters before the asking prices indicated in the Daft rent price data apply to the actual rent amounts being paid according to the RTB. 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 Dublin 1 7 7 8 7 7 6 7 4 7 Dublin 2 2 4 4 7 6 10 9 7 7 Dublin 3 1 4 2 5 3 7 9 5 Dublin 4 6 6 4 6 5 Dublin 5 2 3 1 7 2 5 4 3 3 6 Dublin 6 2 8 7 Dublin 6W 3 2 3 4 8 9 7 Dublin 7 3 3 3 2 4 6 8 6 7 Dublin 8 4 3 4 4 3 5 7 4 6 6 Dublin 9 3 4 4 4 3 4 6 3 4 6 Dublin 10 Dublin 11 7 4 5 6 5 3 4 2 3 5 5 Dublin 12 3 3 4 5 4 4 2 3 4 Dublin 13 5 3 5 5 4 3 5 1 6 6 Dublin 14 2 4 3 3 1 2 2 6 5 Dublin 15 11 8 11 11 8 1 2 3 3 2 Dublin 16 4 1 Dublin 17 8 9 4 6 5 1 2 Dublin 18 2 1 1 3 1 1 1 1 Dublin 20 10 6 4 4 3 3 Dublin 24 7 7 8 7 7 6 7 4 7 This does not take into account any effect the introduction and implementation of Rent Pressure Zones will have on future rents. Rent Projections Rent Index Projections The following chart shows simple projections of the overall Consumer Price Index and of the Rent price index to December 2019, based on previous and current trends. The rent index data is overlaid with the introduction of Rent Pressure Zones15 (RPZ) in December 2016. 15 https://www.rtb.ie/rent-pressure-zones
  29. 29. Irish Residential Rent Analysis Page 29 In the short-term at least, the introduction of RPZs do not appear to have changed the trend of increasing rents. So without interventions in the rent market that reduce demand and/or increase supply, rent prices will likely increase by between at least 13.5% to 18% by the end of 2019. The following chart shows similar simple projections of the Daft Rent price index to December 2019. Again, the rent index data is overlaid with the introduction of Rent Pressure Zones (RPZ) in December 2016.
  30. 30. Irish Residential Rent Analysis Page 30 As above, in the short-term at least, the introduction of RPZs do not appear to have changed the trend of increasing rents. Based on this index and its projections and again assuming no interventions, rent prices will increase by between at least 15% to 22% by the end of 2019. This is probably an overestimate as the Daft index is itself a leading indicator of rent price trends. Linking Rent Price Changes to Changes in the Consumer Price Index There have been calls to index rents to the Consumer Price Index. They question is when to link the rent to the CPI. Renters benefits from large falls in rent in the past. A fixed rent eliminates these benefits. If rent supply increases and/or rent demands decrease such that rents drop will there be a call to remove any linkage to CPI. Similarly, if CPI increases because of the eternal factors such as Brexit, will there be calls to remove the linkage. The following chart shows some projections of rents based on them being fixed to the Consumer Price Index at three times: 1. January 1996 2. March 2002 3. March 2004 For example, if rents were fixed to the CPI in March 2008 when rents started to fall, renters would not have been able to benefit from the very large reduction in rents that persisted until around July 2005. The estimated national total amount of rent that a rented would have paid from March 2008 to December 2017 in these circumstances would have been around 7.8% greater than the rent actually paid. So even in April 2018 the renter is still notionally better off with floating than with fixed rents. This is based on national rents. Experiences may be different for specific locations. This assumes the renter was renting for the entire interval.
  31. 31. Irish Residential Rent Analysis Page 31 The following chart illustrates this payment profile of a rents being fixed in March 2008 and floating rents schematically. If rents were fixed in March 2002, the renter would have paid around 5% less with fixed rents than when rents were left to float. The following chart illustrates this payment profile of a rents being fixed in March 2002 and floating rents schematically. These simple examples do not take into account the change in the value of money over time. So €1,000 paid in rent 10 years ago would have a notional value of €1,060 today. So if you adjusted these figures by expressing the amount paid in present day values, the profile becomes:
  32. 32. Irish Residential Rent Analysis Page 32 Because under the fixed approach in this example when rents were notionally fixed in March 2002 the renter is paying more and those earlier larger payments have a greater present value. So fixing rents to CPI may be a short-term response to increasing rents with longer-term unforeseen and negative consequences. There is a balance to be struck between rent certainty rather than volatility and cost of rent. It could be a case of “be careful what you wish for”. The longer-term analysis shows that linking rents to CPI would have little effect on rents. There is a secondary issue which is the effect on the CPI of linking rents to the CPI. Because of low overall inflation, variation in the CPI has been consistently low for the last 10 years. The CPI consists of a large number of sub-indices. While the rent sub-index is increasing, other sub-indices are decreasing to create this overall flat CPI index. The CPI is largely an artificial construct. The items of which it is composed and the weights assigned to them are based on averages of what is bought. The composition of the CPI changes over time but can lag behind real world purchases. Each individual will have a different profile of expenditure and so will experience a different CPI that can vary considerably from the published national average. If the variation in the rent portion of the CPI, which varies positively from the overall CPI, is removed then this will have a feedback effect on the CPI. The CPI would have to be reconstituted to avoid this negative feedback loop. Daft Rent Index Notes I have included separate notes on the Daft rent index because it is widely quoted and used as a measure of rent increases. Daft is a property web site. Its rental prices represent asking prices for new property lettings rather than being an aggregate of historical and current actual rents being paid. Historically Daft have published four separate rent index time series. The start and end publication dates of these series are: 1. Index 1 - From Q2 2015 to the Present – described as “2012 average = 100”
  33. 33. Irish Residential Rent Analysis Page 33 2. Index 2 - From Q4 2012 to Q1 2015 – described as “2007 average = 100” 3. Index 3 - From Q4 2007 to Q3 2012 – described as “Base: 2007 = 100” 4. Index 4 - From Q4 2006 to Q3 2007 – described as “Base: 2005 = 100” I have used Index 1 in the other sections of these notes. These indices are based on asking prices for new rentals. As such they describe only one part of the rental market. But it can be regarded as a leading indicator of future rental trends. Each of these indices uses a different baseline and covers a different interval: Index 1 - From Q2 2015 to the Present Index 2 - From Q4 2012 to Q1 2015 Index 3 - From Q4 2007 to Q3 2012 Index 4 - From Q4 2006 to Q3 2007 2002 2002 2002 2003 2003 2003 2004 2004 2004 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2009 2009 2009 2010 2010 2010 2011 2011 2011 2012 2012 2012 2013 2013 2014 2014 2015 2015 2016 2017 2018 The indices are also not consistent. This following table shows the index values for the overlapping months of all indices of January 2006 to December 2017 and their individual monthly changes. For example, from December 2016 to January 2017, index 1 shows an increase of 0.40%, index 2 shows an increase of 1.57%, index 3 shows a decrease of 0.10% and index 4 shows a decrease of 0.09%. Month Index 1 % Change Index 2 % Change Index 3 % Change Index 4 % Change Range 2006M01 132.1 119.1 87 103.3 2006M02 132.4 0.23% 119.5 0.34% 86.7 -0.34% 102.6 -0.68% -0.68% to 0.34% 2006M03 133.7 0.98% 120 0.42% 86.7 0.00% 102.8 0.19% 0.00% to 0.98% 2006M04 134.5 0.60% 121.2 1.00% 87.8 1.27% 102.9 0.10% 0.10% to 1.27% 2006M05 138.9 3.27% 121.9 0.58% 88.9 1.25% 105 2.04% 0.58% to 3.27% 2006M06 140.4 1.08% 122.4 0.41% 90.5 1.80% 105.8 0.76% 0.41% to 1.80% 2006M07 140.7 0.21% 123.5 0.90% 91.6 1.22% 107.1 1.23% 0.21% to 1.23% 2006M08 143.7 2.13% 126.6 2.51% 93.6 2.18% 109.4 2.15% 2.13% to 2.51% 2006M09 145.4 1.18% 128.4 1.42% 94.4 0.85% 110.4 0.91% 0.85% to 1.42%
  34. 34. Irish Residential Rent Analysis Page 34 2006M10 146.5 0.76% 129.1 0.55% 96.1 1.80% 112.4 1.81% 0.55% to 1.81% 2006M11 148.3 1.23% 127.3 -1.39% 96.3 0.21% 112.5 0.09% -1.39% to 1.23% 2006M12 148.3 0.00% 127.1 -0.16% 96.7 0.42% 113 0.44% -0.16% to 0.44% 2007M01 148.9 0.40% 129.1 1.57% 96.6 -0.10% 112.9 -0.09% -0.10% to 1.57% 2007M02 150.7 1.21% 130.6 1.16% 97 0.41% 113.4 0.44% 0.41% to 1.21% 2007M03 151.7 0.66% 132.4 1.38% 98.9 1.96% 115.6 1.94% 0.66% to 1.96% 2007M04 152.5 0.53% 132.8 0.30% 96 -2.93% 112.2 -2.94% -2.94% to 0.53% 2007M05 154.3 1.18% 134.5 1.28% 100 4.17% 117.5 4.72% 1.18% to 4.72% 2007M06 155.7 0.91% 135.1 0.45% 105.8 5.80% 123.6 5.19% 0.45% to 5.80% 2007M07 157.3 1.03% 135.5 0.30% 99.8 -5.67% 116.7 -5.58% -5.67% to 1.03% 2007M08 160.1 1.78% 133.8 -1.25% 100.8 1.00% 117.8 0.94% -1.25% to 1.78% 2007M09 160.7 0.37% 134.3 0.37% 102.2 1.39% 119.4 1.36% 0.37% to 1.39% 2007M10 161.3 0.37% 134 -0.22% 102.5 0.29% 119.8 0.34% -0.22% to 0.37% 2007M11 163.6 1.43% 128 -4.48% 101.8 -0.68% -4.48% to 1.43% 2007M12 164.4 0.49% 128.1 0.08% 98.6 -3.14% -3.14% to 0.49% This inconsistency means that the set of series cannot be easily or reasonably reconciled to a common base to provide a single time series along the full length of the individual series from January 2002 to January 2018. The following chart illustrates the four Daft rent indices normalised to a starting value of 100 in January 2002. The starting value of Index 1 which starts in January 2006 has been set to the average of the value of the other three indexes at that date. While the index trends are all very similar, there are reasonably large local variations. This at least partially devalues the usefulness of this source of data. The value of Index 1 – the latest Daft national rent index – is likely to be overestimating actual current rents. But the trend is probably accurate as it is a leading indicator of future rents.
  35. 35. Irish Residential Rent Analysis Page 35 The following chart zooms into the interval January 2006 to December 2008 to show some of the variation between the indices in greater detail. In particular, the month of the previous peak rents varies from June 2007 to July 2007 to January 2008. The current Daft rent Index 1 has the peak in January 2008 and this peak is between 2.6% and 3.4% lower than the peaks of other series. This is the index that Daft now use to articulate the current rent index as a percentage increase over the previous peak rent index values. How Many Renters Are There? The demand for rental accommodation will be driven by demographics. Quite simply, the more people there are the greater the demand. The rapid increase in rents as detailed on page 21 onwards would tend to imply that demand has greatly increased. Demand is also affected by the participation rate or the propensity to rent within the population. As can be seen from the information on page 6 onwards, the percentage of renters within the key age cohorts is increasing. If both the numbers in a given age cohort and the rate of renting for that cohort increase, the impact on demand will be the greater. If the numbers in the key renting cohorts and the rates of renting are: Age Group Number % That Rent Demand 25 - 29 Years N1 R1 N1 x R1 30 - 34 Years N2 R2 N2 x R1 35 - 39 Years N3 R3 N3 x R3 40 - 44 Years N4 R4 N4 x R4
  36. 36. Irish Residential Rent Analysis Page 36 then simplistically demand is: N1 x R1 + N2 x R1 + N3 x R3 + N4 x R4. If both the numbers and the renting rates change, along the following lines Age Group Number % That Rent Demand 25 - 29 Years N1 + n1% R1 + r1% (N1 + n1%) x (R1 + r1%) 30 - 34 Years N2 + n2% R2 + r2% (N2 + n2%) x (R2 + r2%) 35 - 39 Years N3 + n3% R3 + r3% (N3 + n3%) x (R3 + r3%) 40 - 44 Years N4 + n4% R4 + r4% (N4 + n4%) x (R4 + r4%) then simplistically demand becomes: (N1 + n1%) x (R1 + r1%) + (N2 + n2%) x (R2 + r2%) + (N3 + n3%) x (R3 + r3%) + (N3 + n3%) x (R3 + r3%) Similarly a reduction in supply will cause prices to increase. However the information on the number of tenancies on page 12 onwards shows that supply in Dublin appears to have remained largely static. On page 6, I described the age profile of the heads of households that rented, both nationally and in Dublin. For example, in Dublin, where the age group of the head of the household was 25 - 29 years 75.88% of those households rented. This is not the same as the proportion of the total population that rents. The age groups in Dublin based on the age of the head of the household that rented were: Age Group Rented 25 - 29 Years 75.88% 30 - 34 Years 61.76% 35 - 39 Years 46.44% The following table summarises the numbers of heads of households and the total population16 for the Dublin area for 2016 Age Group Heads of Households 2016 All Renting Households 2016 Renting Households RTB Tenancies 2016 Total Population 2016 Heads of Households as a Percentage of Population Renting Households as a Percentage of Population Under 25 Years 13,656 10,872 9,807 430,684 3.17% 2.52% 25 - 29 Years 33,522 25,438 23,068 111,569 30.05% 22.80% 30 - 34 Years 53,205 32,860 28,738 123,426 43.11% 26.62% 35 - 39 Years 59,420 27,593 22,377 120,544 49.29% 22.89% 40 - 44 Years 52,963 19,152 13,662 100,210 52.85% 19.11% 16 The population data is taken from EY006: Population 2011 to 2016 by Age Group, Detailed Marital Status, County and City and Census Year https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=EY006&PLanguage=0
  37. 37. Irish Residential Rent Analysis Page 37 45 - 49 Years 46,836 13,540 8,432 86,537 54.12% 15.65% 50 - 54 Years 43,575 10,151 5,330 78,349 55.62% 12.96% 55 - 59 Years 40,055 7,911 3,523 70,490 56.82% 11.22% 60 - 64 Years 34,923 6,071 2,136 60,566 57.66% 10.02% 65 Years And Over 101,004 11,548 3,379 164,984 61.22% 7.00% Total 479,159 165,136 120,452 1,347,359 35.56% 12.26% The number of renting households includes 44,684 that rent from Local Authorities. Excluding these, as they are not included in the number of tenancies registered by the RTB, gives 120,452 tenancies. This is shown in the column Renting Households RTB Tenancies 2016. The following chart shows the estimated annual population17 for the four age groups that comprise most renters. It also shows the sum of the population in these groups on the right-hand axis in red. This shows the changes in the four main renting cohorts from the years 2000 to 2017. The size of the 25 - 29 Years cohort row and then dropped, both as a consequence of immigration up to 2007 and then emigration and of an aging population. The size of the 30 - 34 Years cohort rose, levelled off and then fell slightly. Again this was caused by immigration up to 2007, then emigration and of an aging population. The size of the 35 - 39 Years and 40 - 44 Years cohorts rose gradually over the interval. This is largely caused by an aging population over the interval. The size of the aggregate Total 25 - 44 Years cohort rose rapidly from 2000 to 2007, then levelled-off and started to increase very gradually from 2013 onwards. 17 The annual population estimates are taken from PEA07: Estimated Population (Persons in April) by Age Group, Sex, Regional Authority Area and Year https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=PEA07&PLanguage=0
  38. 38. Irish Residential Rent Analysis Page 38 The numbers used to create this chart are (in thousands): Age Group 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 25 - 29 Years 105.8 109 111.9 113.3 114.9 119.7 131.8 143.9 148.4 143.8 133.8 125.9 117.7 113.1 110.4 110.4 111.8 110.4 30 - 34 Years 83.7 88.5 96.4 100 101.6 104.8 108.4 112.2 114.7 118.7 121.6 127.2 127.6 128.3 127.2 124.6 123.5 120.1 35 - 39 Years 82.3 82.3 83.2 83.6 84.6 86.1 89.3 95.3 99.4 101.5 102.6 103.7 104 106.3 110.5 115.7 120.2 124.2 40 - 44 Years 71.8 74.1 75.5 77.2 78.6 79.9 80.1 82.1 82.4 82.9 84 87.4 88.9 91.4 94.9 97.8 99.6 102.9 Total 25 - 44 Years 343.6 353.9 367 374.1 379.7 390.5 409.6 433.5 444.9 446.9 442 444.2 438.2 439.1 443 448.5 455.1 457.6 The number of tenancies registered by the RTB in Dublin in March 2017 was 124,574 with 272,981 bedrooms. So, in Dublin there should be sufficient tenancies to accommodate those looking to rent. This number of tenancies does not include those that do not have to be registered – see page 15. So the amount of rental accommodation will be greater than this. The size of the core renting population has not significantly increased in the last 10 years. The following chart overlays the CSO CPI rent index and the Daft rent index (on the left hand axis) with the Dublin population from 2000 to 2017. The population numbers are shown in thousands on the right- hand axis in red. Rents fell from mid-2008 to the end of 2012. During this time the size of the core renting population remained largely the same. While the size of the renting population of Dublin has increased only slightly from 2012 onwards, rents have increased quite substantially over the same time. This could be occur for one or both of the following reasons: 1. All the population increase was due to net immigration who would almost exclusively rent
  39. 39. Irish Residential Rent Analysis Page 39 2. The recorded population number underestimates the actual population and thus the actual demand for rented accommodation The recorded population in the aggregate Total 25 - 44 Years cohort from 2012 to 2017 was 19,400. This roughly consisted on the following individual age cohort changes. Age Group Estimated Change From 2012 to 2017 25 - 29 Years 21.3 30 - 34 Years 2.4 35 - 39 Years -3.4 40 - 44 Years -1.1 So the main cause of the change in the Dublin population was due to migration, either internal (moving to Dublin from elsewhere in Ireland to work or study) within Ireland or from outside Ireland. It may be that the rental market in Dublin represents an ill-conditioned system, that is, one where the output value of the system changes substantially as a consequence of a small change in the input value. Supply and demand may be so balanced that a small increase is demand or a small decrease in demand may cause a disproportionate change in rents. The sensitivity of the rental market could be increased by removing the turnover of people leaving the rental market on purchasing a property. However, the potential issue of unrecorded population increase due to migration cannot be discounted. The rent indices listed above are national and the population numbers were local to Dublin. The rent indices for Dublin would have shown a higher local increase than that which applied nationally. The following chart overlays the CSO CPI rent index and the Daft rent index with the national population from 2000 to 2017. The population numbers are shown in thousands on the right-hand axis in red.
  40. 40. Irish Residential Rent Analysis Page 40 The main difference from the Dublin profile is that nationally the population in the aggregate Total 25 - 44 Years cohort fell from a peak in 2013. Yet the national rent indices increased substantially at the same time. Even in the interval 2008 to 2010 when the population in the aggregate Total 25 - 44 Years cohort was increasing substantially, the rent indices recorded a fall.
  41. 41. Irish Residential Rent Analysis Page 41 What Is The Effect Of Airbnb On The Residential Rental Market? There have been comments on the impact of Airbnb on the property rental market. It is frequently stated that many landlords are switching their rental properties to Airbnb and thus reducing the number of properties available for general rental. Inside Airbnb (http://insideairbnb.com/get-the-data.html) contains a snapshot of Dublin rentals from 18 February, 2017. There are also commercial providers of Airbnb data such as https://www.airdna.co/market- data/app/ie/default/dublin/overview. The Inside Airbnb data lists the following rentals for Dublin: Entire Home/Apartment Private Room Shared Room Type Number Bedrooms Spaces Number Bedrooms Spaces Number Bedrooms Spaces Apartment 2,123 3,212 8,171 1,548 1,566 3,082 105 105 164 Bed & Breakfast 6 18 30 180 206 457 6 6 13 Boat 1 1 2 1 1 2 0 0 0 Bungalow 15 29 62 13 13 28 1 1 2 Cabina 27 42 104 20 20 41 0 0 0 Camper/RV 0 0 0 0 0 0 1 1 6 Chalet 7 6 23 1 1 2 0 0 0 Condominium 15 28 63 19 19 39 2 2 2 Dorm 0 0 0 9 9 26 2 2 5 Guesthouse 7 8 17 2 2 3 4 4 7 Hostel 0 0 0 2 2 8 1 1 4 House 849 2,289 4,513 1,488 1,512 2,954 55 55 130 Hut 2 3 6 0 0 0 0 0 0 Loft 11 11 39 15 15 29 1 1 2 Nature Lodge 2 0 6 0 0 0 0 0 0 Other 34 53 130 27 27 60 3 3 4 Serviced Apartment 8 16 31 6 8 11 0 0 0 Townhouse 56 129 260 49 47 100 0 0 0 Treehouse 1 4 8 0 0 0 0 0 0 Villa 1 4 7 3 4 6 0 0 0 Total 3,165 5,853 13,472 3,383 3,452 6,848 181 181 339 The spaces value is taken from the stated numbers the rentals can accommodate. It may or may not be realistic. The number of rentals for the types of Apartment, Bungalow, House, Serviced Apartment and Townhouse where the entire property is to let is 3,051 with 5,675 bedrooms. There are the types of unit that are being displaced from standard rental by Airbnb. The Inside Airbnb data represents 2.45% of the 124,574 registered tenancies (see page 14) and 2.08% of the 272,981 bedrooms in those tenancies.
  42. 42. Irish Residential Rent Analysis Page 42 It should be further noted that while the Inside Airbnb data lists 6,729 Airbnb properties available (in February 2017), Airdna (which is more current) lists only 6,104. This does not represent a significant proportion of the available tenancies. Focussing on Airbnb as a major cause of the problem and thus the source of a solution to the current high rents in Dublin would be misplaced. The Rise of the Institutional Residential Property Letting Investor These are some very high-level notes on this subject. It is beyond the scope of this analysis to perform a more detailed analysis. One of the trends that has emerged in the last ten or so years is the rise of institutional residential property letting investor. In broad terms, there are two types of such investor: 1. Those investing in residential properties for general letting 2. Those investing (typically) high-end student accommodation The only public source of data relating to this is the property price register. Information is only recorded on this register if a sale transaction occurs. For example, in the case of student accommodation that has been developed and retained by the developer without a sale occurring, there is no record of this on the property price register. This information contained in the register is not consistent. In some cases, the purchase of an entire block (or blocks) of apartments is registered as a single transaction. For example, the following purchases were recorded as single transactions: Address Purchase Price Block F K and L Central Park, Leopardstown €86,365,000.00 Blocks F K and L Central Park, Leopardstown €70,503,358.00 Binary Hub Roe's Lane, Bonham Street €69,208,163.00 1 THE ELYSIAN, EGLINTON STREET, CORK €67,700,000.00 Tallaght Cross West, Tallaght €64,085,057.00 Clancy Barracks, Clancy Quay €61,828,634.00 CLANCY QUAY, ISLANDBRIDGE €60,528,634.00 The Elysian, Eglinton Street €52,000,000.00 Other transactions less obviously involve the purchase of large numbers of residential units and could represent data errors, such as: Address Purchase Price 3 THE LINKS, ELM PARK, MERRION RD DUBLIN 4 €49,315,625.00 APT 1 THOMOND VILLAGE, UNIVERSITY OF LIMERICK GARRAUN, CLONLARA €33,180,000.00 Of the top 65 transactions by price listed in the property price register that appear to apply to the purchase of multiple units, only nine were for new properties. The remaining 56 were for already properties.
  43. 43. Irish Residential Rent Analysis Page 43 In other cases, the units involved in the sale are listed as multiple individual transaction, each with a slightly different address, such as: Date Number of Transactions Listed Address Total Purchase Price 01/06/2012 210 Apt 1 Alliance Building, The Gasworks Barrow Street, South Lotts Road €34,940,947 25/06/2014 111 Apartment 203 Bushy Park House, Templeogue Road, Terenure €26,300,000 06/10/2014 123 Aot 435 Charlestown Centre, Charlestown Place, St Margaret's Road Finglas €23,419,706 28/01/2015 105 2 South Central, Rockbrook, Sandyford €25,897,951 17/02/2016 115 10 The Links, Elm Park, Merrion Road €38,845,853 Where the threshold for the number of properties bought at the same address on the same day is set to six or more for that purchase to be regarded as institution, the following sets of purchases in Dublin can be regarded as institutional. Quarter Value of Purchases Number of Purchases Number of Residential Units Bought 2010 Q1 €0 0 0 2010 Q2 €0 0 0 2010 Q3 €0 0 0 2010 Q4 €5,018,715 2 23 2011 Q1 €613,216 1 7 2011 Q2 €0 0 0 2011 Q3 €0 0 0 2011 Q4 €4,514,195 2 31 2012 Q1 €3,303,965 1 15 2012 Q2 €34,940,947 3 210 2012 Q3 €11,424,295 4 76 2012 Q4 €0 0 0 2013 Q1 €0 0 0 2013 Q2 €0 0 0 2013 Q3 €10,360,594 5 70 2013 Q4 €3,004,171 2 31 2014 Q1 €2,152,340 1 20 2014 Q2 €32,798,001 3 134 2014 Q3 €43,293,390 4 40 2014 Q4 €70,571,042 22 334 2015 Q1 €21,290,223 8 109 2015 Q2 €58,879,387 26 305 2015 Q3 €3,845,000 2 19 2015 Q4 €4,751,253 3 33 2016 Q1 €14,681,145 8 66 2016 Q2 €8,985,181 3 32
  44. 44. Irish Residential Rent Analysis Page 44 Quarter Value of Purchases Number of Purchases Number of Residential Units Bought 2016 Q3 €7,253,779 4 31 2016 Q4 €19,894,921 4 66 2017 Q1 €35,278,440 7 119 2017 Q2 €32,770,712 9 124 2017 Q3 €23,816,849 7 128 2017 Q4 €22,519,134 6 95 2018 Q1 €3,331,395 2 14 Total €144,865,230 39 577 The national numbers using the same selection factors are: Quarter Value of Purchases Number of Purchases Number of Residential Units Bought 2010 Q1 €5,991,186 1 16 2010 Q2 €0 0 0 2010 Q3 €0 0 0 2010 Q4 €5,018,715 2 23 2011 Q1 €2,852,996 3 24 2011 Q2 €813,524 1 7 2011 Q3 €4,044,000 2 24 2011 Q4 €4,994,195 3 39 2012 Q1 €3,303,965 1 15 2012 Q2 €35,302,181 4 217 2012 Q3 €11,424,295 4 76 2012 Q4 €1,459,129 3 25 2013 Q1 €2,508,916 3 31 2013 Q2 €0 0 0 2013 Q3 €10,360,594 5 70 2013 Q4 €3,556,431 5 54 2014 Q1 €4,206,254 5 74 2014 Q2 €33,822,928 6 164 2014 Q3 €44,011,194 6 55 2014 Q4 €81,250,476 34 479 2015 Q1 €22,978,045 15 173 2015 Q2 €69,162,851 35 399 2015 Q3 €9,723,689 11 120 2015 Q4 €7,463,609 8 79 2016 Q1 €17,836,506 12 124 2016 Q2 €9,793,112 4 40 2016 Q3 €10,657,791 11 92 2016 Q4 €26,537,689 11 135 2017 Q1 €62,970,250 14 200 2017 Q2 €42,401,425 16 205 2017 Q3 €27,780,926 11 172 2017 Q4 €34,021,524 17 197
  45. 45. Irish Residential Rent Analysis Page 45 Quarter Value of Purchases Number of Purchases Number of Residential Units Bought 2018 Q1 €7,385,963 5 43 Total €211,755,568 85 1,044 A simple analysis shows that of the 308,403 property transactions currently listed on the property price register with a total value of €71,707,513,663, around €2.4 billion or 3.4% can be viewed as representing institutional purchases. (This comprises both the large transactions and the multiple connected individual transactions.) These probably represent around 13,000 residential units nationally. Around 75% of these purchases occurred in Dublin. These probably represent around 9,500 residential units in Dublin. These purchases recorded since 2010 represent just under 8% of the total number of registered tenancies. To this, any previous purchases would have to be added to get a complete view. This represents a significant change in the rental sector, especially in Dublin. There is a belief that residential institutional letters change a higher rent than other residential landlords. Validating this would require access to the detailed information on registered tenancies held by the RTB. These could be matched with the addresses of these large-scale purchases. This would allow the impact of residential institutional lettings on the increases in residential rents to be isolated from the general trend. Institutional investors in residential rental property enjoy a more favourable tax treatment than do individual property investors. This may further increase the number of such institutional investors. What is The Future for Renting and Renters? As I mentioned earlier, demand in the form of population in a key driver of rents. It is beyond the scope of this brief analysis to create population projections in an attempt to forecast demand for rental properties. However, historical population data is a useful indicator of future trends. The following shows the national population estimates for the key renting age cohorts and the overall population (shown on the right hand axis in red).
  46. 46. Irish Residential Rent Analysis Page 46 The rate of increase of the overall population decreased in 2008 and has started to increase again in 2016. An effective rental sector is a necessary component of a functional residential property market. It allows people who move to Ireland find a place to live quickly. It allows quick relocation within Ireland. It acts as a buffer between people leaving the parental home and buying a residential property. In Ireland, the residential letting component of the market developed informally with little support or intervention or recognition of its importance until recently. The dysfunctional residential rental market is affecting other parts of the economy. The key trends affecting the level of residential rents are:  Increased demand in the renting cohort of 25 to 44  Increase in institutional residential letting investor  No increase is supply The lack of supply further increases the problem by removing the turnover of people leaving the rental market on purchasing a property. The overall increase in the population of Ireland, from 3,626,087 in 1996 to 4,792,490 in 2017 or an increase of just over 32% in the 21 years. This is a cumulative average annual increase of 1.34%. The contribution to population increase from the excess of births over deaths averaged around 0.8% in the interval 1996 to 2017. The remainder of the growth is due to net immigration. In fact, net immigration is a greater contributor as the immigrants themselves contribute to the birth rate. The population of Dublin increased by 33.4% between the years 1997 and 2017. However the population for the Mid-East region that incorporates the counties of Kildare, Louth, Meath and Wicklow increased by 58.1% between the years 1997 and 2017. This indicates the growth in these dormitory areas for Dublin. This indicates a potential latent demand for housing in Dublin that cannot be met and so is driving demand elsewhere. This could indicate that if additional property is made available in Dublin, these people could attempt to move to Dublin, leading to any increased supply in the short-term being absorbed by this latent demand. Supply can only be increased at a lag of several years. So in the short term rents will increase.
  47. 47. Irish Residential Rent Analysis Page 47 This has the potential to represents a systemic risk to the overall economy. High rents and the lack of quality affordable residential rental property will inhibit immigration that is necessary to provide employees for companies operating in certain economic sectors. It may inhibit companies establishing themselves in Ireland because of perceived problems with availability of housing and the associated problems with acquiring and retaining personnel. High rents may lead to a demand for increased wages which may in turn inhibit economic growth. Summary The data publically available on residential renting is patch, disparate and, in some case, of poor quality. All the rent indices demonstrate the same pattern of increase. The Daft rent index is a leading indicator of rents based on asking prices for new lettings. In the short-term at least, the introduction of Rent Pressure Zones (RPZ) do not appear to have changed the trend of increasing rents. So without interventions in the rent market that reduce demand and/or increase supply, rent prices will likely increase by between at least 13.5% to 18% by the end of 2019. Demand for rental properties is driven by increased population. A large part of the population increase in the renting age groups is due to net immigration who almost exclusively rent. It may also be that the recorded population number underestimates the actual population and thus the actual demand for rented accommodation Most renters are aged between 25 to 44 – 60.7% in 2011 and 60.5% in 2016. Nationally private landlords accounted for 68.0% of lettings in 2011 and 65.9% in 2016. In Dublin private landlords accounted 71.1% in 2011 and 69.3% in 2016. RTB has records for 124,574 tenancies in the Dublin area with 272,981 bedrooms in March 2017. This excludes Local Authorities and a range of holiday, informal and family property lettings. The number of tenancies registered with the RTB has increased slightly indicating no drop in supply. In the five and half years from Jun 2012 to Dec 2017, the number of BTL mortgages dropper by 27,821 or 18.52%. The number of repossessions in the interval was 4,897. So the number of BTL mortgages is dropping. This may be due to the group of people to who this lending relates – accidental landlords – selling their investment properties. The last 10 years has seen the growth of the institutional residential property investor, especially in Dublin. Around 75% of large-scale multiple unit residential property purchases occurred in Dublin. These probably represent around 9,500 residential units. This represents a significant change in the rental sector, especially in Dublin. There is a belief that residential institutional letters change a higher rent than other residential landlords. This may be one driver of increased rents. In the last nine years, only 15,408 new property purchases were registered in Dublin. This illustrates the lack of new property supply in Dublin to accommodate a growing population and a demand for rental accommodation.
  48. 48. Irish Residential Rent Analysis Page 48 Airbnb rentals represent only 2.45% of the 124,574 registered tenancies and 2.08% of the 272,981 bedrooms in those tenancies and so is not significant. Problems with availability and affordability of suitable residential rental accommodation represents a potential systemic economic risk.

×