Rent prices on the way up?

Jaden

Apparently, or at least according to Daft.

RTE Article Here

Transcript:

Figures published this morning show that rents across the country rose in January for the first time in two years.
Property website Daft.ie said average rents moved up 1% in the month, bringing the national average to €765 a month, 25% below peak levels in early 2008.
Daft economist Ronan Lyons said it was too early to say whether rents had levelled off, but the January increase was broadly consistent throughout the country.
He said this was likely to be because of a steady fall in the number of properties available to rent. Mr Lyons said the stock of property available to rent had fallen by more than 20% over the past five months, and now stood at 19,000.
Over the past two years, the stock of rental properties had surged from 6,000 to a peak of more than 23,000 in August last year.
Meanwhile, Daft said that in 2009, Dublin rents fell by almost 19%, while rents in Cork, Limerick and Waterford cities dropped by 16%.

JoeyJJ

Still plenty of areas with oversupply which will not rise until that is reduced or it shouldn't.

Jomcc

Heard that on radio this morning and thought........oh we're back to our old tricks again. Try make people think that they must rent/buy now quickly before nothing is available at the lower price.
Absolute bull in my opinion.........that's what got us into this mess in the first place.
People are just going to have to think for themselves before being swayed by "propoganda" being issued by groups with a vested interested.

Cathmandooo

Jomcc wrote: »

Heard that on radio this morning and thought........oh we're back to our old tricks again. Try make people think that they must rent/buy now quickly before nothing is available at the lower price.
Absolute bull in my opinion.........that's what got us into this mess in the first place.
People are just going to have to think for themselves before being swayed by "propoganda" being issued by groups with a vested interested.

That's exactly what I thought too when I saw it in the paper this morning. I havent heard of anyone who hasn't been able to negotiate rent for a new lease down. I believe they're getting this 'rise' from ads going off daft at a certain rent but that the tenant has further negotiated the rent down without it actually being on daft for that.

johndoc

There's never been a better time to buy lads:rolleyes:

Cathooo wrote: »

I believe they're getting this 'rise' from ads going off daft at a certain rent but that the tenant has further negotiated the rent down without it actually being on daft for that.

Its much simpler than that. Its simply made up.
Facts of the matter below.....


From http://www.irishpropertywatch.com/viewLatestReports.php

Rental Report # 43 7th Feb 2010
1,778 reductions, 259 increases

This report is over the period, from the 2010-01-26 to the 2010-02-07.

The drops per day was 148 up from 102 last report.

There were 1,778 drops and the average drop was €75 .
Over the same period there were 259 increases and the average increase was €109
The average rent was on 2010-02-07 was €803 down from €804 on the 2010-01-26

Latest Sales Report 14th Feb 2010
3,020 Price Drops & 165 Price Increases

This report is over the period, from the 2010-01-30 to the 2010-02-13.

The drops per day was 216 up from 212 last report.

There were 3,020 drops and the average drop was €41,464 .
Over the same period there were 165 increases and the average increase was €24,752
The 3,020 properties reduced the price by just over €125.2 million in total.

The 165 properties raised their price by just under €4.1 million in total.

SkepticOne

Important thing to remember here is that it is asking rents that are rising. Whether those rents are achieved is another matter.

BluePlanet

There is a certain sensationalism to this story and in particular the way it's being bandied about.
Vested interests.

Be wise

Cookie_Monster

I would assume that this is partially because of rising interest rates for mortgage and the soon to come base rate rises. Those who bought to rent are hiking fees to try cover increasing repayments

SkepticOne

Cookie_Monster wrote: »

I would assume that this is partially because of rising interest rates for mortgage and the soon to come base rate rises. Those who bought to rent are hiking fees to try cover increasing repayments

Unfortunately for landlords what they will find is that their outgoings are only part of the story. What tenants are willing to pay is the other part and, given the still large oversupply, probably the overriding part.

seamus

I don't really doubt the veracity of the Daft report that much, though there's probably a lot more behind the figures than simply "demand is going up".

What's more likely is that the supply *is* dropping, but not because demand is going up, rather because circumstances are changing so people are pulling more properties off the rental market either to sit on them or to live in them.
Dublin in particular, the largest rental market (relatively and actually), has seen a solid decline in the number of properties for sale *and* for rent since last summer. I don't know what or why that's happening, but if the number of rental properties in Dublin is dropping, then that's likely to increase asking prices in Dublin, which will have an effect on the country average.

johndoc's figures from irishpropertywatch quote an average rent way above daft's figure which leads me to believe that IPW is less accurate than daft because it doesn't have direct access to the data.

Regardless of the difference between "asking" and "actual", the asking is still market-dependent, so if asking has been dropping consistently in 2009, there has to be some reasoning behind increasing the asking in 2010.

shoegirl

I'm not entirely convinced either way. For a start since PRTB kicked in a lot of landlords are locking tenants into 12 month leases which effectively prevents them from negotiating down rents. Additionally, many landlords don't reduce rent per se, but unbundle waste and heating costs in order to conceal the real cost. For example it used to be very common for landlords to include waste charges in conversions, but now most charge tenants a flat rate. I've even come across some misers who charge the PRTB fee straight back to the tenant (and then claim tax relief on it).

I live in a cold dark resonant tunnel off Wellington road in Cork and 3 of the 6 flats on the lower 2 floors of the house I'm in have had tenant changes in the last few months (I will follow in a couple of months time myself). Interestingly enough, all of the prior tenants had been there for 2 or more years and all were working, but all have been replaced by couples or singles on the dole. Whats even more interesting is that the landlord is looking for exactly the same rents as she looked for when I started looking in 2007 (I know this as I actually did look at one of her other properties before this one). I don't know if she is getting them, but they were only vacant for a couple of weeks. I suspect tenants have either been going back to Eastern Europe or finding cheaper places further out of town. One thing that is very striking is its no longer a problem finding parking as working tenants with cars leave the street.

I'm looking around myself and while the rents are not lower there is considerably more choice than there was at this level. However the standards (I'm talking about 1 or 2 bed units in the city in the 600-650 a month region) are still very poor indeed and most of the reasonable quality housing is still 700-850 a month. That said, there is much more choice than there was when I was looking around 3 years ago - a lot of stuff is "available immediately" and despite the usual practice of agencies re-entering onto Daft every day, a lot of stuff seems to be there 2 or 3 weeks.

I would suspect that lower allowances for welfare tenants is having an impact at the bottom level but couples on welfare would still have some room to make unofficial top-up payments which has been commonplace for a long time. This might explain why fewer cars are on the road - two years ago even the most "impoverished" of dole recipients seemed to have a car - that is not the case now. (You can tell which car owners are or are not working as parking spaces are not allocated and so cars owned by working tenants "move around" as they come and go each day, whereas welfare dependent car owners rarely move cars, sometimes for weeks on end! There isn't a lot of difference in age and condition of cars as most of the working tenants are just as poor as most of the welfare dependent tenants, if not poorer.)

Sarn

Another contributing factor would be landlords who raise their asking price because they expect the prospective tenant to look for a discount, with the concept that inflated asking prices will lead to a better deal (for the landlord).

I've seen a few places that have been on the market for a while put their rents back up by about a €100 despite being unable to rent them for a few months. I take it that the lower asking rent leads to offers well below what they're willing to take.

Victor

One swallow doesn't make a summer.

accensi0n

Sarn wrote: »

Another contributing factor would be landlords who raise their asking price because they expect the prospective tenant to look for a discount, with the concept that inflated asking prices will lead to a better deal (for the landlord).

I've seen a few places that have been on the market for a while put their rents back up by about a €100 despite being unable to rent them for a few months. I take it that the lower asking rent leads to offers well below what they're willing to take.

I've been doing searches on daft.ie in the 700-800 range for D2,4,6,14 and I've noticed this a good bit.

Reduce rent, reduce rent, increase rent, reduce rent...wtf?

antoinolachtnai

Well, rents are probably bottoming out.

There is actually a price below which it's not really worth renting a property and maybe we have reached that. On the other hand, the supply of newly built properies coming into the rental market could finally be slowing.

Cathmandooo

accensi0n wrote: »

I've been doing searches on daft.ie in the 700-800 range for D2,4,6,14 and I've noticed this a good bit.

Reduce rent, reduce rent, increase rent, reduce rent...wtf?

It's simply because the longer a place is vacant, the more money the landlord is losing. The landlord takes a chance by putting the rent back up, perhaps there arent as many places in the vicinity available anymore, in the hope that someone will take the place without noticing that it was on the market for lower and they can make up for some of the lost rent while the place was vacant.

When no one bites at the higher price they end up giving in and putting the rent back down.

faceman

Victor wrote: »

One swallow doesn't make a summer.

Completely agree. One period's figures are not indicative of anything.

shoegirl

johndoc wrote: »

From http://www.irishpropertywatch.com/viewLatestReports.php

I've entertained myself for the entire morning on this (the afternoon will be busy as I try to catch up!!)

Its REALLY interesting to see that a lot of properties that come back onto the market repeatedly (and you do need to ask questions there as most places generally don't reappear within 12 months) do so at the original price and sometimes higher! A lot of the properties with 2/3 price drops also had price rises - which indicates that the letting agency or landlord (and occasionally they are one and the same - there are 2 at least I know of who just rent their own massive property portfolios) tried to get higher rents when the place went back on the market.

I'm not sure how they are indentifying the properties either. What is noticeable sometimes is the exact common features in a house - for example I can always spot my own landlord's places because the decor is always the same.

Whats interesting is to look at a single street as often this gives a strong indication of price trends. Yet I notice a lot of price rises alongside price drops. Its hardly noticeable in the city, what is far more striking is a much larger backlog of unlet property. I suspect that this in itself may be impacting prices as ultimately no prospective tenant has the time or energy to trail around the entire city comparing properties. They will generally pick out a few based on price, location, size and impression from photos.

Here is a few interesting ones to search for:

1. Look up "Wellesley" under Cork city. This gives quite a few places that have both risen and dropped.
2. Mill Road under Co Cork (this is in Midleton). Lots of apartments in this area. Huge price drops over the last couple of years.
3. Gould Street under Cork city. This was a random pick - a lot of variety - I suspect thats down to a lot of different kinds of houses on this street. A lot of price changes.
4. Look up "Wood Quay" or "woodquay" under county cork and restrict to 3 beds. I rented here for 2 years and the rent for a 3 bed went from 650 in 2005 to 700 in 06. It does appear to have continued climbing though. Interesting to see the price changes here. Also worth looking at the 2 bedroomed changes.

Really interesting. You get a better picture when you start to compare like with like. Areas with a large amount of rented property and therefore competition seem to be suffering more.

connundrum

I had to laugh at one LL who I made enquiries to about his house. It'd been on daft a while, starting at €1150, dropping to €1100 and then increasing to €1200. I asked him about the fluctuations and he said that the crowd that managed the house for him previously had been messing with the price, saying that by changing the price it'd 'appeal to different markets week on week'.

He seemed very upset that I was only willing to offer him €950 for the house regardless of whatever he or his management company were asking :pac:

jetski

and did he rent it to you?

Guell72

connundrum wrote: »

I had to laugh at one LL who I made enquiries to about his house. It'd been on daft a while, starting at €1150, dropping to €1100 and then increasing to €1200. I asked him about the fluctuations and he said that the crowd that managed the house for him previously had been messing with the price, saying that by changing the price it'd 'appeal to different markets week on week'.

He seemed very upset that I was only willing to offer him €950 for the house regardless of whatever he or his management company were asking :pac:

They use the same ad for different clients. One of my workmates got on to the agency renting his apartment after noticing the price going up and down and the ad still there after it was rented. He knew the agent well, so they told him the story. If a similar apartment is in the same place they will just change the price on the ad. Sometimes they even change the number of bedrooms.
And they keep the ads up sometimes even if there are no places to rent, just to gauge interest too.

stepbar

If estate agents were forced to publish property sale prices it would solve the myth of asking rental prices. An estate agent rang me this morning to tell me with glee that a property I was due to see had been sold. "How much for?" I asked. "I can't tell you that I'm afraid, but it was close to the sale price" she says. Mmmm :rolleyes: For the record, the gaff was a 1 bed in the Hardwicke apt complex and was on the market @ 150k.

Of course, there are landlords out there who have no debt and can rent for what they like. At least if prices were published and available to the public, people would be able to determine a reasonable rental value.

connundrum

jetski wrote: »

and did he rent it to you?

Nope, he was so unhappy with my offer of €950pm that he rejected it politely, and watched as it sat unoccupied for 3 months (Dec to present day).

He really showed me.

antoinolachtnai

stepbar wrote: »

If estate agents were forced to publish property sale prices it would solve the myth of asking rental prices. An estate agent rang me this morning to tell me with glee that a property I was due to see had been sold. "How much for?" I asked. "I can't tell you that I'm afraid, but it was close to the sale price" she says. Mmmm :rolleyes: For the record, the gaff was a 1 bed in the Hardwicke apt complex and was on the market @ 150k.

Of course, there are landlords out there who have no debt and can rent for what they like. At least if prices were published and available to the public, people would be able to determine a reasonable rental value.

Landlords do have to disclose prices to the PRTB and PRTB has the power to produce statistics about local rents (section 131 of the RTA). They just don't seem to do it.

I know where you are coming from but strictly speaking, no landlord can let for what they like. They can only rent for what the market (i.e., renters) will pay.

Jo King

stepbar wrote: »

. "How much for?" I asked. "I can't tell you that I'm afraid, but it was close to the sale price" she says. Mmmm :rolleyes: For the record, the gaff was a 1 bed in the Hardwicke apt complex and was on the market @ 150k.

Close to the sale price. It was sold FOR the sale price. What you were asking is what was the sale price?
There are lies, damned lies and statistics. It is far too early to see a trend in the market. One thing is certain. Investors are out of the market. It is almost impossible for most investors to raise finance for residential investment and very few are willing to invest anyway. The last tim4e investors were frozen out of the market was after the Bacon Report inspired reforms in 1997. Rents soared as a result. The situation where there are more investors leaving the market than entering it will inevitably lead to rents stabilising and then increasing.

stepbar

antoinolachtnai wrote: »

Landlords do have to disclose prices to the PRTB and PRTB has the power to produce statistics about local rents (section 131 of the RTA). They just don't seem to do it. - Interesting...

I know where you are coming from but strictly speaking, no landlord can let for what they like. They can only rent for what the market (i.e., renters) will pay.

Of course, but what I mean is that a landlord in that position can choose to let or hold on to a property and effectively can let for what he/she likes as they're under no pressure.

Treehouse72

Rents are stabilising. But not for one single moment does that indicate any kind of recovery. In fact, the opposite:

1. The bottoming out of rents simply reveals the extent to which sale prices are still ludicrously overinflated. By no less than 30%, and usually more - the yields tell us this with certainty. And even adding a premium for ownership we can clearly see that sale prices are still a joke without rents having to drop another penny from today.

2. Rents are only stabilising within the context of the mess that is the Dublin rental market. This is a market in which rents START at rent supplement level. This means people on salaries of up to 30k are competing with welfare recipients for rental properties priced around €600 (for singles). These properties are often grimy bedsits in less desirable areas. But move up the ladder just a wee bit and you can get nice 1-bed apartments for €800. A €200 difference between these 2 classes of property is not logical, nor is the fact that houses start at much the same price as those 1-beds. Indeed, most houses in Dublin are rentable for €900 - €1300. The variation in quality, location and size is massive, and yet the price differentials are tiny. This bunching of prices is total nonsense and the sign of a sick market. In this context, talk of tiny rent rises is meaningless since the market needs to fix itself structurally before price changes mean anything.

3. Supply. So, are we to believe that we are at peak supply? Four letters: NAMA. And that's not to mention all the other empties out there that at some point will have to enter the market.

.........

The whole thing is total balls. Believe the hype at your own risk.

stepbar

Jo King wrote: »

Close to the sale price. It was sold FOR the sale price. What you were asking is what was the sale price?
There are lies, damned lies and statistics. It is far too early to see a trend in the market. One thing is certain. Investors are out of the market. It is almost impossible for most investors to raise finance for residential investment and very few are willing to invest anyway. The last tim4e investors were frozen out of the market was after the Bacon Report inspired reforms in 1997. Rents soared as a result. The situation where there are more investors leaving the market than entering it will inevitably lead to rents stabilising and then increasing.

Another gaff I've been keeping an eye on....

http://www.myhome.ie/residential/brochure/49-shandon-mill-phibsboro-dublin-7/137816

I got a call from the Estate Agent today (I offered 115k back 4 months ago)..... The same Estate Agent called last week wondering was I still interested.

He reiterates that "2 investors" had recently placed bids, one for 125k and another for 130k. The week before I asked him out straight "What will the vendor accept?" .... "150k". "I'll think about it" - I said (I never had any intention of increasing my offer).

Now considering that
A) average RIL interest rates are c 4-5%
investors are being asked to produce 25% of the purchase price (for lending) and
C) the property would rent for no more than 700eur,
D) there are very few with the cash readily available and even if they do deposit rates are compariable with yields on property at the mo
I simply don't believe him.

Jo King

Treehouse72 wrote: »

Rents are stabilising.

2. Rents are only stabilising within the context of the mess that is the Dublin rental market. This is a market in which rents START at rent supplement level. This means people on salaries of up to 30k are competing with welfare recipients for rental properties priced around €600 (for singles). These properties are often grimy bedsits in less desirable areas. But move up the ladder just a wee bit and you can get nice 1-bed apartments for €800. A €200 difference between these 2 classes of property is not logical, nor is the fact that houses start at much the same price as those 1-beds. Indeed, most houses in Dublin are rentable for €900 - €1300. The variation in quality, location and size is massive, and yet the price differentials are tiny. This bunching of prices is total nonsense and the sign of a sick market. In this context, talk of tiny rent rises is meaningless since the market needs to fix itself structurally before price changes mean anything.

Singles are less that €600 in Dublin. The rent allowance is capped at a rent of about €500 and even then the welfare officers are insisting on standards.
There has always been tight bunching of rents. Rent does not rise uniformly with size facilities or location. I have seen flats in Gardiner Street Dublin 1 let for more than the identical flat in Waterloo Road Dublin 4.
Yields are correcting. Without investors in the market yields will have to go up. This can only happen through price falls or rent rises or a combination of the two.

Victor

Jo King wrote: »

The last tim4e investors were frozen out of the market was after the Bacon Report inspired reforms in 1997.

2001-2002 was when the government removed mortgage interest relief for investors.

Jo King

Victor wrote: »

2001-2002 was when the government removed mortgage interest relief for investors.

2001-2002 was when they put it back.

http://www.ncmortgagebrokers.ie/BuytoLet-FAQs.aspx

Is there any Tax Relief on Buy to let property?

With respect to investors, interest relief on monies borrowed to purchase or improve rented residential properties has been restored by the Minister for Finance in the recent Budget and will apply from 1 January 2002 and can be set off against rental income for the same period. This relief had originally been withdrawn following the 1998 "Bacon Report".

Later changed to 75% of interest allowable.