Are we facing a rental crash?

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Panzraam

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Looking at the latest graphs on http://daftwatch.atspace.com/ it is obvious that there has been a rapid increase in supply of rental properties (from approx 6,000 in Oct to >10,500 now).

It would seem logical that such an increase in supply would be exerting some downward pressure on rents. Are people noticing rents dropping or longer vacant periods on properties, or is there another dynamic at work in the rental market? What does this increase in supply mean for it mean for investment in residential property in Ireland? Are we facing a crash in rents?
 

DeeFox

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I have an involvement in the letting of a number of apartments and yes I have noticed that they have become harder to let in the past month or so. I have had to drop rents significantly on two currently available apartments and I have still not let them. I've noticed that people viewing have become "fussier" and won't settle for apartments that would have been snapped up earlier in the year. I advertise on daft and by putting up an ad in the local shop close to the apartments - up to recently a property would normally be taken within two days or so. However, I've now also put an ad in the local paper - something that would have been totally unnecessary up to, say, Feb of this year. The rent will just have to be dropped even further if they are not let soon.
 
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mercman

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It depends on the location of the property as to comment if there will be a crash or not. Rents certainly overall have softened. As many developers are renting out apartments if they are unable to sell. And bear in mimd that there are many persons returning 'Home' as the employment requirement is rapidly declining.
 
R

renter

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Yes. We are facing a rental crash. Details of rental price drops are here.

http://www.treesdontgrowtothesky.com/Blog/

We have recently secured a 20% drop in rent by moving from a brand new large detached house to an even bigger brand new detached house with a huge garden in a Section 23 tax incentive area where there are so many new houses that can't be sold at current prices that vendors including developers have given up and decided to rent.

Our former landlord was the devloper of the estate we lived in and the new landlady even openly admitted that she regretted buying the house given what has happened in the market in the last year or so. The rental yield is less than 3%, so more money could be made on deposit in a bank.
We got an extra 10% off the asking rent in our new house even after it was blankly refused at the viewing. Landlady changed her mind a few days later when she realised that there were few tenants available to absorb the massive rental oversupply. The CSO 2006 Census estimated that there are over 200,000 empty habitable houses in Ireland, so it is not suprising that the rental market is following the sales market trend.
 

television

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Depends on where your renting. There will continue to be a high demand for quality rental housing/appartments in certain areas. I double there is too many empty habitable houses in Dublin 1-14 for example.
 
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mercman

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Maybe, but the void periods are longer and the achieved rents are far less than six months ago.
 

bugler

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I've been keeping an eye on a certain type of property in Dublin 1/7/9 and there's definitely a downward trend. I'm actually looking to move, but I'm in no rush and I'm waiting for rents to come down further, and also for the right place of course.

Aside from prices being dropped I'm also seeing ads staying up for far longer, viewings being cancelled or rearranged etc. Last time I was looking for a place some ads were being taken down after minutes due to the volume of interest.
 

Mrs.B

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.... a 2.8% gross yield and people think the UK BTL brigade have problems. Madness.
 

badabing

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http://daftwatch.atspace.com/daftcounty_1.html

Supply for sale and rent seems to have levelled out in Dublin, although it looks to early to say if unrented properties has actually topped out.

It is not correct to say people are going home as the labour market is weak. As long as official figures indicate economic expansion, there will be expansion in the labour market, since our expansion is not coming from productivity gains. GDP expansion is down, but not in negative territory. Therefore real demand for property is still increasing. One offset to this would be children prolonging flying the parents nest.

As the slowdown in building continues, there will come a second upward wave in rent prices as suppply of total property (to let and owner occupy) lags demand. Constant expansion of GDP will necessitate this. I would imagine however, we are some way from this in Dublin, nevermind other areas. One annecdotal note I would make is being involved in selling to the construction industry, that it has slowed down to a trickle
 
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Camry

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http://daftwatch.atspace.com/daftcounty_1.html

Supply for sale and rent seems to have levelled out in Dublin, although it looks to early to say if unrented properties has actually topped out.

It is not correct to say people are going home as the labour market is weak. As long as official figures indicate economic expansion, there will be expansion in the labour market, since our expansion is not coming from productivity gains. GDP expansion is down, but not in negative territory. Therefore real demand for property is still increasing. One offset to this would be children prolonging flying the parents nest.

As the slowdown in building continues, there will come a second upward wave in rent prices as suppply of total property (to let and owner occupy) lags demand. Constant expansion of GDP will necessitate this. I would imagine however, we are some way from this in Dublin, nevermind other areas. One annecdotal note I would make is being involved in selling to the construction industry, that it has slowed down to a trickle
Unfortunately that is incorrect. In the most recently released data it fell in Q4 2007 (-1.3% GDP, -2.2% GNP). We need to wait and see if this was a blip or if it extended into the first quater of 2008 and represents the start of a recession. The information we have about industrial output and activity in the service sector in January and February does not augur well.:eek:

http://www.cso.ie/releasespublications/documents/economy/current/qna.pdf
 

JohnBoy

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Not to mention that unemployment has increased from 4.5% in September to 5.2% in February - the March figures are due on Friday. To echo what Camry has said there is already enough statistical evidence around to suggest that the Irish economy is already in recession.
 

JohnBoy

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Not to mention that unemployment has increased from 4.5% in September to 5.2% in February - the March figures are due on Friday. To echo what Camry has said there is already enough statistical evidence around to suggest that the Irish economy is already in recession.
Just to update you - the unemployment rate hit 5.5% in March.
 

Sunny

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To echo what Camry has said there is already enough statistical evidence around to suggest that the Irish economy is already in recession.
There is no statistical evidence that suggests Ireland is anywhere near a recession. A recession is two or more successive quarters of negative GDP growth. Irelands economy is still growing albeit slowing down.
 
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Camry

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There is no statistical evidence that suggests Ireland is anywhere near a recession. A recession is two or more successive quarters of negative GDP growth. Irelands economy is still growing albeit slowing down.
Statistical evidence:

Fact: GDP (and GNP) fell in Q4 2007
Fact: monthly indicators of activity in: manufacturing, services and construction sectors unambiguously show falling activity January-March (i.e. flaling output in Q1 2008).

What other conclusion can one reach? Q1 2008 will show falling GDP/GNP again.
 
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mercman

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And as or if not more important is that sentiment is been eroded. Without placing a Political angle on the matter, the opposition who are jockying for position have managed to blast through negativity after negativity after negativity, so much so that it is now sticking. First it was residential property, then commercial property and now consumer demand. This is now causing rents to decline. If any of these half witted Politicians could shut up and declare their own policies, the entire economic base would not be as effected as it is.
 
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