Why is the cost of property, esp renting, so high in Dublin?

Shelga · 14-01-2020 5:59pm #1

With the general election looming, I really want to try and understand why the cost of housing for your average Joe is so astronomical in Ireland, especially Dublin, before I jump on the "it's all the politicians' fault" bandwagon- even if that does turn out to be the case!

I used to live in Birmingham, a city of a similar size to Dublin, for around 4 years. I lived in the city centre, in a 2-bedroom flat (old-ish, nothing spectacular, but nice, big bedrooms etc), next to Broad St, with a housemate, and our rent was £600 total, so £300 each per month. Now, this is not me having a whinge and a moan, I have zero desire to move back there, but I'm genuinely trying to understand why an apartment in a similarly centrally located part of Dublin would probably cost around €1900 to rent.

You usually hear it's a case of supply vs demand, but why is supply so low? Why is the cost to build so high? Why are there so few landlords, seemingly, compared to regional UK cities?

Would be good to strip all this back to basics and understand how it has come to this. The cost to buy is also quite high, but rent is the real killer, IMO. Would be great to hear from people who know about such things and hear their takes on it.

Basically, how much grief can I give the FG canvasser when he comes knocking on my door over the coming weeks!

Mike3549 · 14-01-2020 6:11pm

But Birmingham is not a capital city. In this case size really doesnt matter. Plus supply and demand. More people coming to Dublin than builders can build. Regulations for newbuilds. I heard It costs extra 20k to build a house this year compared to last year. Last year min ber was a3, this year - a2. And so on and on...

lainey_d_123 · 14-01-2020 6:15pm

What Mike said. Birmingham isn't a capital city and the bulk of the jobs are based in London. Dublin has loads of multinationals and there aren't a load of work opportunities elsewhere in Ireland, so it's a case of supply and demand. There are always more people looking for rooms/flats in Dublin and there are rooms and flats available.

I remember during the crash, the prices dropped right down, and the same studio in Rathmines I'd seen for 1200 euros pcm before the crash was going for 800, but that was short lived. I'd say rents are even worse than at the peak of the bubble right now.

Shelga · 14-01-2020 6:21pm

But Berlin is a capital city? And rent is probably half that of Dublin.

JustAThought · 14-01-2020 6:23pm

Shelga wrote: »

But Berlin is a capital city? And rent is probably half that of Dublin.

different country, high rise, rent control ,federal funding, givt owned blocks, lifelong leases at almost communist party rates , etc etc . Apples and oranges.

Taylor365 · 14-01-2020 6:24pm

The brilliant idea not to build high and to strangle transport routes to death.

Another corker - Every apartment requiring a parking space.

Tiddlypeeps · 14-01-2020 6:29pm

Between 2005 and 2020 the population of Dublin has risen by around 200k people, that is around a 20% increase in population. During the crash construction all but stopped for a number of years despite the fact a lot of people were still moving to Dublin to find work. The supply side of things is still struggling to make up for that gap.

skooterblue2 · 14-01-2020 6:29pm

The real issues are why is everything centered around Dublin.
There are too many factories in Dublin 15 that could be more evenly distributed the country town. I think its been mentioned before that towns like Longford, Tipperary, Nenagh Mitchelstown and border towns are dying for industry and suffering from outward migration.

Amirani · 14-01-2020 6:32pm

Shelga wrote: »

But Berlin is a capital city? And rent is probably half that of Dublin.

Per capita income in Dublin is about 50% higher than Berlin, and the general price levels are higher.

Berlin was economically stagnant for many years and has only really become a bit more vibrant in recent years: https://www.thelocal.de/20190424/new-report-shows-where-germanys-biggest-wealth-divisions-are

Rents in Berlin are actually high enough relative to disposable income.

Assetbacked · 14-01-2020 6:36pm

The high cost is related to the lack of supply versus the huge increase in demand the past five years.

Evidence of this is found on the rental section on daft; anything affordable (i.e. Less than €2k per month) is old stock which only commands such high rent (relative to median salaries) because supply has been static for a decade. FG rely on the market to deliver the necessary housing supply yet they pay millions in subsidising rent for the less well-off - this ensures the institutionals at the top cream from working classes and those at the bottom become more dependent on the State. All at the expense of anyone who works for a living. The best solution is to significantly increase the supply of social housing, which FG just won't do.

lainey_d_123 · 14-01-2020 6:37pm

Shelga wrote: »

But Berlin is a capital city? And rent is probably half that of Dublin.

Have you been recently? Renting in Berlin is very expensive now, not that far off Dublin prices.

It's also not Germany's biggest industrial city where all the jobs are concentrated. There are loads of other big cities with jobs .- Frankfurt, Stuttgart, Dusseldorf, Cologne. Not the case in Ireland.

handlemaster · 14-01-2020 7:01pm

Shelga wrote: »

With the general election looming, I really want to try and understand why the cost of housing for your average Joe is so astronomical in Ireland, especially Dublin, before I jump on the "it's all the politicians' fault" bandwagon- even if that does turn out to be the case!

I used to live in Birmingham, a city of a similar size to Dublin, for around 4 years. I lived in the city centre, in a 2-bedroom flat (old-ish, nothing spectacular, but nice, big bedrooms etc), next to Broad St, with a housemate, and our rent was £600 total, so £300 each per month. Now, this is not me having a whinge and a moan, I have zero desire to move back there, but I'm genuinely trying to understand why an apartment in a similarly centrally located part of Dublin would probably cost around €1900 to rent.

You usually hear it's a case of supply vs demand, but why is supply so low? Why is the cost to build so high? Why are there so few landlords, seemingly, compared to regional UK cities?

Would be good to strip all this back to basics and understand how it has come to this. The cost to buy is also quite high, but rent is the real killer, IMO. Would be great to hear from people who know about such things and hear their takes on it.

Basically, how much grief can I give the FG canvasser when he comes knocking on my door over the coming weeks!

Can you compare salaries and quality of life for young professionals the driving force of the tech sector ?

ReReg Numpty · 14-01-2020 7:01pm

The property & land markets have been monetised as an asset class, which means they are a strategic component of the nation's wealth.

In order to build that wealth, which is by and large good for everyone, supply is deliberately restricted to increase value, and to leverage further economic growth.

In theory, this is not an issue although it clearly impacts on people's lives in a way that other asset classes don't. A growing number of people now have accommodation rather than a home. But how bad is that relative to the benefits of a wealthy economy? That is a divisive debate.

Dublin is the principal engine driving this asset class, like London is in the UK. Not sure where is all going, seeing as there are some innovative construction techniques coming that will make house building much cheaper. Along with remote working, property prices could well stagnate in cities for years.

handlemaster · 14-01-2020 7:05pm

skooterblue2 wrote: »

The real issues are why is everything centered around Dublin.
There are too many factories in Dublin 15 that could be more evenly distributed the country town. I think its been mentioned before that towns like Longford, Tipperary, Nenagh Mitchelstown and border towns are dying for industry and suffering from outward migration.

Cost of transport for goods and suitable labourer force. Who would want to live in longford if you have a skilled training. We need the best the world has to offer for industry and this is not always irish.

14-01-2020 7:24pm

Op, why is renting/buying in some parts of London so much more expensive than Birmingham?

Idbatterim · 14-01-2020 7:28pm

Op for a far better understanding of why government wants and fully supports and encourages expensive property, just look at this! If you have an interest in this, this is going to fill in the dots for you!

https://www.youtube.com/watch?v=XL3n59wC8kk

humans are selfish by nature, that FG canvasser knocking to your door? likely a homeowner. Any politician running for election, likely a home owner. Those in planning? homeowners. You see where I am going with this... You dont need to be a landlord to want rising prices...

q85dw7osi4lebg · 14-01-2020 7:33pm

Because there is no incentive to be a landlord.

Rental income - €1800
Tax - up to €850
Mortgage payment - More than €850

Where's the incentive. Capital appreciation over 20 years isn't guaranteed.

Your tenant can choose to not pay rent for 2 years while you go through the PRTB process.

Stone mad to be a landlord in Ireland (Dublin at least)

Shelga · 14-01-2020 7:37pm

I suppose I'm not really asking why Berlin or Birmingham or wherever is so cheap, but rather, why is Dublin so expensive, and who is to blame, if anyone.

I get that salaries are high in Dublin and the economy is good, but no one who is of sound mind can think €1900 for a 2 bed in Santry is good value: https://www.daft.ie/dublin/apartments-for-rent/santry/parklands-northwood-santry-dublin-1993046/

So what are the many factors that contribute to why supply is so appalling? The economy has been growing for roughly 5/6 years now, so why is it so slow to catch up?

q85dw7osi4lebg · 14-01-2020 7:40pm

Shelga wrote: »

I suppose I'm not really asking why Berlin or Birmingham or wherever is so cheap, but rather, why is Dublin so expensive, and who is to blame, if anyone.

I get that salaries are high in Dublin and the economy is good, but no one who is of sound mind can think €1680 for a 2 bed in Santry is good value: https://www.daft.ie/21992011

So what are the many factors that contribute to why supply is so appalling? The economy has been growing for roughly 5/6 years now, so why is it so slow to catch up?

See above.

Landlords are selling, not buying.

Tenants have too many protections.

boring accountant · 14-01-2020 7:44pm

skooterblue2 wrote: »

The real issues are why is everything centered around Dublin.
There are too many factories in Dublin 15 that could be more evenly distributed the country town. I think its been mentioned before that towns like Longford, Tipperary, Nenagh Mitchelstown and border towns are dying for industry and suffering from outward migration.

Urbanisation is a global trend. Nothing you can do to change that. The only solution is to make the best of the situation by improving infrastructure and maybe incentivising retirees to move out of Dublin to make room for workers.

Idbatterim · 14-01-2020 8:01pm

Shelga wrote: »

I suppose I'm not really asking why Berlin or Birmingham or wherever is so cheap, but rather, why is Dublin so expensive, and who is to blame, if anyone.

I get that salaries are high in Dublin and the economy is good, but no one who is of sound mind can think €1900 for a 2 bed in Santry is good value: https://www.daft.ie/dublin/apartments-for-rent/santry/parklands-northwood-santry-dublin-1993046/

So what are the many factors that contribute to why supply is so appalling? The economy has been growing for roughly 5/6 years now, so why is it so slow to catch up?

moron planners would be top of the chain of blame! I take it youve seen the docklands? endless 5/6 floor lego blocks. Yet people commute to the masses of offices there, on the appalling transport system here from miles out, often sharing family homes. Moronic "planning" system is the prime culprit. Arbitrary height limits!

J_1980 · 14-01-2020 8:03pm

Shelga wrote: »

But Berlin is a capital city? And rent is probably half that of Dublin.

Berlin has no jobs. No West German company built their headquarters in the enemy’s land and East Germany had no real white collar jobs. Might even be the only european capital city that is a net receiver in the national accounts.

Why are Irish rents high?
Socialism always makes everything expensive. Builders/tradies don’t come as there’s nothing left after tax, the bottom 10% of society get generously alimented, crowding out the working class above them etc.
I’m German, in East Germany (when we visited relatives) everyone was equal but anything slightly in demand was unaffordable.

And it doesn’t matter who comes into power in next election, Irish construction industry is pretty much at capacity anyway. If the left/ FF etc. wins then Wayne and Waynetta with their 5 kids benefit - not anyone working 9-5. Expect more emigration of key staff (trades, doctors, nurses). Seen it all before in East Germany, they built the wall and shot all trying to emigrate. Luckily this won’t happen here. Boris will happily snap up the Irish nurses to fill his new hospitals

14-01-2020 8:06pm

skooterblue2 wrote: »

The real issues are why is everything centered around Dublin.
There are too many factories in Dublin 15 that could be more evenly distributed the country town. I think its been mentioned before that towns like Longford, Tipperary, Nenagh Mitchelstown and border towns are dying for industry and suffering from outward migration.

This is precisely it. For everything to be centre around one city, in a country this size, is just abysmal long-term planning, stretching back decades.

c.30% of Irish population lives in Dublin.

For comparisons;

London c.14%
Oslo c.14%
Madrid c.14%
Copenhagen c.12%
Helsinki c.12%
Amsterdam c.10%
Brussels c.10%
Lisbon c.5%
Berlin c.5%
Paris c.3%

Marius34 · 14-01-2020 8:07pm

The price for property in Dublin is very normal for that size and economy level, while the renting is absolutely to high.
The main factor for the very high rents is due to the very low supplies of residential property over the past 10 years (due to residential construction crisis), especially for such a young city with growing population and booming economy.
To make things worse, private landlords are highly taxed, typically 50-52% on the profit, I don’t know any other country with that high taxation for private landlords. And more than that property should be supplied furnished, whereas in many European countries it’s common to rent unfurnished (at least Denmark and Germany from my own experience).

Browney7 · 14-01-2020 8:12pm

Hugh Attractive Signboard wrote: »

Because there is no incentive to be a landlord.

Rental income - €1800
Tax - up to €850
Mortgage payment - More than €850

Where's the incentive. Capital appreciation over 20 years isn't guaranteed.

Your tenant can choose to not pay rent for 2 years while you go through the PRTB process.

Stone mad to be a landlord in Ireland (Dublin at least)

Aren't you ignoring the pay down of the mortgage capital here?

Donald Trump · 14-01-2020 8:15pm

Hugh Attractive Signboard wrote: »

Because there is no incentive to be a landlord.

Rental income - €1800
Tax - up to €850
Mortgage payment - More than €850

Where's the incentive. Capital appreciation over 20 years isn't guaranteed.

Your tenant can choose to not pay rent for 2 years while you go through the PRTB process.

Stone mad to be a landlord in Ireland (Dublin at least)

Why should there be an incentive for speculative amateur landlords.

Do you think that you should be somehow given a risk-free guaranteed return to own an asset in 30 years which will be paid back by some tenant? There are too many people out there thinking that they should be entitled to go into the bank, spend a few hours filling out a few forms, buy a house, forget about it for 30 years and then come back to sell it and keep the proceeds after some gobshite paid off their mortgage for them.

Become a landlord by all means if you have the skills, time, effort and risk management ability to make it work.

I'll agree that tenant have too many protections - in the case of those that won't pay or overhold or damage the property. But those are the rules of the game. If you can't manage by those rules in worst case scenario, then put your money elsewhere

lainey_d_123 · 14-01-2020 8:30pm

Shelga wrote: »

I suppose I'm not really asking why Berlin or Birmingham or wherever is so cheap, but rather, why is Dublin so expensive, and who is to blame, if anyone.

I get that salaries are high in Dublin and the economy is good, but no one who is of sound mind can think €1900 for a 2 bed in Santry is good value: https://www.daft.ie/dublin/apartments-for-rent/santry/parklands-northwood-santry-dublin-1993046/

So what are the many factors that contribute to why supply is so appalling? The economy has been growing for roughly 5/6 years now, so why is it so slow to catch up?

You don't seem to understand how supply and demand works.

There are far more people looking for housing than there is housing.

It's literally that simple.

People don't rent because they think it's good value, they rent because they need somewhere to lie so they can go to work. There are loads of cabin crew and airport workers living in that area - they want a nice enough place which is handy for getting to the airport, and that's what the going rate is.

14-01-2020 8:40pm

Donald Trump wrote: »

Why should there be an incentive for speculative amateur landlords.

Do you think that you should be somehow given a risk-free guaranteed return to own an asset in 30 years which will be paid back by some tenant? There are too many people out there thinking that they should be entitled to go into the bank, spend a few hours filling out a few forms, buy a house, forget about it for 30 years and then come back to sell it and keep the proceeds after some gobshite paid off their mortgage for them.

Become a landlord by all means if you have the skills, time, effort and risk management ability to make it work.

I'll agree that tenant have too many protections - in the case of those that won't pay or overhold or damage the property. But those are the rules of the game. If you can't manage by those rules in worst case scenario, then put your money elsewhere

Simple really, without a financial incentive to invest, there is no investment in rental property. REITS may be interested in investing in large cities, they certainly are not outside them.

I must admit, I now get a kick when I see posts like yours decrying “amateur landlords” in derogatory tones, you get what you deserve when large investment funds buy out complete developments before they are finished so they can rent at the highest market price, and automatically increase year on year. Then take their profits out of the country. That’ll show those pesky small time amateur landlords, oh hold on, that means you pay higher rents. Nice.

But you are correct in one sense, the incentives like high yields and capital appreciation should not be guaranteed, but they need to be a good possibility if you want to encourage investment and increase availability. Strange how at a time when rents are at an all time high, property values have increased, yet investors are leaving, go figure.

dubrov · 14-01-2020 9:01pm

In fairness, history has shown that incentives just drive up site and asset prices. Existing landlords benefit but the game stays the same for new entrants

hmmm · 14-01-2020 9:14pm

Shelga wrote: »

So what are the many factors that contribute to why supply is so appalling? The economy has been growing for roughly 5/6 years now, so why is it so slow to catch up?

We're seeing lots of supply coming along with big build-to-rent developments.

These are facing significant opposition however for reasons, much of it manufactured outrage by left-wing parties.

Bypassing the NIMBY brigade with ABP applications for large developments is a great and welcome development.

The Student · 14-01-2020 9:18pm

You have to encourage existing landlords to stay in the market while supply increases otherwise demand will continue to increase while supply decreases.

A two bed rented property may house 4 adults. If it is sold to an owner occupier it may only house two adults. Where do the other two adults go?

Why is the cost of property, esp renting, so high in Dublin?

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