How has the Dublin rental market been affected by the COVID-19 pandemic?
The whole world has been affected by COVID-19 and Dublin’s rental market is no different. Daft’s recent report on the rental market shows us that rents have fallen in April by 2.5%. Although, the evidence suggests that rental prices had begun to slow down and decrease ever so slightly prior to the COVID-19 pandemic taking grip. Daft’s previous report in January (based on Q4 2019) showed the first quarter in 29 consecutive quarters where rents did not rise.
There are a number of factors that have resulted in the decrease in rental levels:
- Affordability. With rents at such a high level, affordability was always looming as an issue. The onset of the COVID-19 pandemic has resulted in salary cuts, hours reduced and unfortunately job losses. The real effect of the pandemic on unemployment levels won’t be known for a number of months (most likely 12 months) as business re-open and in some cases fail to reopen. With salary cuts and reduced hours, this has significantly impacted tenants ability to pay.
- Shutdown of the short-term rental market. This was particularly noticeable in city centre areas as within a couple of days of the government restrictions being put in place, Dublin 8 saw a surge of c 500 1 and 2 bed properties available for rent on the long-term market (according to figures from Daft.ie). It was obvious from the advertisement photographs that these were AirBnB properties (the folded towels on the beds are usually a giveaway!). The influx of similar properties to the market at the same time has resulted in a reduction in rental levels. For example, last year we let a 1 bedroom apartment in Christchurch for €1900pm while we have a property in the same development on the market at the moment for €1650pm).
- Lack of transactions. While government restrictions have been in place, there has been limited transactions in the rental market. While there have been some as both agents and landlords have introduced video or virtual viewings into their repertoire, tenants are unwilling to move given the uncertainty in the market.
Only time will tell for the long term effect of COVID-19 on the rental market but I believe there is still a supply issue but hopefully with more properties switching from short-term lets to the long-term letting market this will help improve the situation for tenants and will result in a more sustainable rental market. There are still a large number of factors that are causing a shortage of supply but I won’t deal with them today!