Market rents rose by an average of 6.8 per cent during 2023, according to research.
The average increase is down from 13.7 per cent in 2022 and 10.3 per cent in 2021, according to the latest rent report from property website Daft.ie
The average open-market rent nationwide in the final quarter was €1,850 per month, compared with €1,365 per month seen at the outbreak of Covid-19 in early 2020.
The decline in rental inflation is driven by Dublin, where rents in the open market rose by just 2.6 per cent during 2023, compared with an average increase outside the capital of 10.6 per cent.
Rents in Cork and Waterford cities rose by between 7 per cent and 8 per cent during the year, while those in Galway and Limerick cities rose by 11.3 per cent and 14 per cent respectively.
Outside the cities, the smallest annual increase was seen in Dublin’s commuter counties (7.5 per cent) while the largest increase was seen in the three Ulster counties, where market rents were almost 17 per cent higher than a year earlier.
Daft.ie said the different trends in rent are matched by differences in changes in the availability of rental accommodation.
Nationally, the number of homes available to rent increased by 937 between October 2022 and December 2023.
Of that increase, 80 per cent was seen in the Dublin area, while almost all the rest was seen in surrounding areas.
On February 1st, there were just over 2,200 homes available to rent nationwide, up 6 per cent on the same date a year earlier and the 11th month in a row of year-on-year gains in availability.
The author of the report said accommodation demands have not been addressed outside Dublin.
Ronan Lyons, associate professor of economics at Trinity College Dublin, said: “Unless policy actions are taken to change course over the next few years, the number of new rental homes built in Dublin will fall again, while it will remain close to zero elsewhere in the country.”
He added: “The construction of significant amounts of new homes to rent in Dublin over the last two years is reflected in the near-disappearance of inflation in market rents in the capital.
“This is a welcome reminder that the basic economics of supply and demand work in rental markets and thus that new supply is the answer to strong rental demand.
“However, there has been almost no new rental accommodation built outside Dublin, where acute rental shortage also exist.
“Further, the pipeline of rental projects in Dublin is likely to slow in 2024 and beyond. With significant viability challenges, it remains incumbent on policymakers to deliver a healthy rental market around the country.”
