Irish Rental Report Q3 2024

This latest Daft.ie Rental Report suggests a growing alignment in rental market conditions across Ireland. For much of the past year, Dublin has experienced relatively stable rent prices, in stark contrast to other regions, where rents surged to record highs. In 2023, rents in Dublin increased by just 2.6%, the lowest rate of inflation since 2012, excluding the pandemic year. However, while Dublin saw modest increases, many other areas faced double-digit rent inflation. For example, Kilkenny rents rose by 17%, Laois saw even higher increases, and counties like Cavan, Roscommon, and Longford experienced similar hikes. In fact, at the start of the year, only five of the 29 rental markets tracked in the report had inflation rates below 10%, while only one Dublin district (Dublin 20) exceeded 10%.

Given these trends, one might speculate that the rise in rents outside Dublin was part of a broader post-COVID shift in where people choose to live. If this were the case, we’d expect urban areas to see less rental inflation compared to rural ones. However, that wasn’t the case. By early 2024, rents in Galway city had risen by over 15%, and in Limerick city, they climbed by more than 21%—the highest in the country. This suggests that the trend isn’t about people fleeing cities. In fact, Dublin had seen strong rental growth in 2022, with a mid-year spike of 14%.

To better understand the emerging trends, we must look at supply dynamics. Over the past year, Dublin has experienced a steady increase in rental inflation, rising from 2.6% in early 2023 to 5.2% in the latest report. While still lower than the dramatic post-COVID surge, the upward pressure on Dublin’s rental market is becoming more evident. Meanwhile, rents outside Dublin are showing signs of easing. The inflation rate in areas outside the capital has dropped from 12.3% at the start of 2023 to 8.9% in Q3. The quarterly increase outside Dublin in Q3—1.4%—was the lowest in this cycle, following 17 consecutive quarters of growth.

In short, the gap in rental inflation between Dublin and the rest of the country has narrowed from nearly 10 percentage points to less than four since the start of the year.

So, why was Dublin’s rental inflation so muted in 2023 compared to other regions, and why is that gap closing? The answer lies in supply. Although it’s difficult to pinpoint the exact number of rental units completed, the supply of apartments is a key factor. In recent years, Dublin has seen a significant increase in apartment construction, which helped keep rents relatively stable. In 2020, fewer than 3,000 apartments were built in Dublin, but that number increased to 4,000 in 2021 and nearly 7,000 in 2022. The peak came in 2023, with over 9,000 apartments completed—more than 80% of all new apartments built nationwide.

Before this boom, Dublin faced a shortfall of around 90,000 apartments. To address the backlog and keep up with new demand, the city needed approximately 15,000 new apartments each year throughout the 2020s. 2023 was the only year that came close to meeting this target, which explains why rents in Dublin have been more stable than in the past.

While this was good news, the downside is that this apartment boom has been largely confined to Dublin due to the high cost of construction elsewhere. The more concerning news is that the apartment boom in Dublin now seems to be slowing. In the first nine months of 2024, the number of new apartments completed in Dublin was down 25% compared to the same period in 2023. As the supply pipeline dries up, Dublin is likely to face the same challenges as the rest of the country—an ongoing shortage of rental properties amid strong demand.