Daft Rental Report Q4 2008 - Year in Review

8/14/2019 Daft Rental Report Q4 2008 - Year in Review

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IntroductionIntroduction by Gerard ONeill, Amarach Research

Renting the Future

2 | The Da t.ie Rental Report 2008 Q4: The Year in Review

An American riend was telling me recently about his grandparents and their crazy habit (inhis opinion) o always keeping a lot o cash in the house. Under the mattress, so to speak. Hereckoned it was a consequence o their having lived through the Great Depression and witnessingover 3,000 banks ail, wiping out a generations savings in the process. Such ormative experiencesin our youth tend to shape our values and behaviours over the rest o our lives, long a ter theexperiences have passed.

Here in Ireland, a generation o young people under 30 will never look at property the same wayagain as a result o what they are now experiencing and will experience over the next ew years. This is not a storm that will pass, loosening a ew slates on the roo . Rather, we are experiencing anearthquake that will trans orm key eatures o Irelands economic landscape beyond recognition.As with all such economic upheavals there are social, political and cultural consequences as well.One such consequence that I anticipate is a permanent demise in the Irish love a air in atuationeven with property ownership. Especially debt- unded ownership. I would go urther and agreewith uturist Kevin Kelly (www.kk.org) that theres a big uture or renting not just property butalso or entertainment, urniture, clothes, cars, etc. Renting is the new buying.

The appetite or ownership is a unction o scarcity: when ownership is e ectively the onlyguarantee o access to the bene ts o a particular good or service then other arrangements aregrossly in erior. But when the supply o something becomes abundant even excessive relative

to underlying demand then ownership becomes unnecessary. We dont own the roads we driveon nor the world wide web that we sur yet we have more or less unlimited access to all we wantwhen we want it. An ironic consequence o the recent ailures o nance- uelled capitalism maywell be to undermine orever the oundational aith in private property ownership as a source o wealth and reedom. Though ironic doesnt quite do justice to such an outcome.

So much or the uture, what o the present? An appropriate description o many economicindicators right now is summed up by the phrase cli -diving. Its a phrase economists have takento using to describe everything rom interest rates to trade volumes to employment to consumerspending. This is my ourth recession in my adult li e and I can sa ely say I have never witnessed somany indicators change direction so ast nor move so swi tly in the wrong direction. Were living

in a whiplash economy, brought to a sudden stop by a wall o ear.

Continued on next page >

Gerard ONeill is Chairman o Amrach Research.He regularly blogs on the state o the nation at www.turbulenceahead.com


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IntroductionIntroduction by Gerard ONeill, Amarach Research

Renting the Future


One eature o cli -diving indices is that the rate o decline accelerates. Maximum velocity is characterised by

double digit gures. So it is with rents in Ireland: the year-on-year rate o decline in the Da t.ie National Rent Indexaccelerated rom -3.2% in Q3 2008 to -12.2% in Q4 2008. The January 2009 rate o decline stood at -13%. Supply isoutpacing demand. This is Irelands rst middle class recession pro essionals are joining unskilled workers on the dole queues. I anything, it is the Irish middle class who are bearing the brunt o this recession as they are the ones with the mostdebt typically geared to both incomes o working couples. Long gone are the days o a middle class comprisingworking husbands and stay-at-home mums: since 2001 the majority o married women o working age in Irelandhave been in paid employment. That was how the middle class uelled the expansion o the buy-to-let market, aided-and-abetted by our over-leveraged banks.

Now it is middle class areas that are being hardest hit by the collapse in rental prices. The astest declining rental

markets in Q4 2008 were South Dublin City (-10.0%) and South Dublin County (-15.2%). The latter was the astestdeclining area in the country. O course, so ar we are looking at this rom the perspective o the landlords. Howmany o them are there? A survey last year by Amrach Research or the Irish Banking Federation showed that 15% o adults aged 25-65 own a property other than their own, down rom 20% the previous year. Not all o these owners o second homes and apartments rent them out so an even smaller minority are actually exposed to the vicissitudes o the rental market. That said, the Governments ingenious plan to sharply increase taxes on people who own a secondhome might just have a ew un oreseen consequence: such as orcing those not renting out their properties to eitherrent them out or to sell them or whatever they can get. Expect alling rental prices and alling house prices to ollow.Not to mention alling tax revenues rom house sales (that are pro-rata to sales prices). But these are un oreseeableconsequences dont orget.

What then about the renters? They are spoilt or choice, pure and simple. Moreover, with the banks a raid to lend andworkers a raid or their jobs then the prospects or rental demand look good. And not just or one and two bedroomapartments either but so also or 3 and 4-bedroom houses. Expect a lot o people ormally-known-as-middle-class todownshi t rom the mortgage-indebtedness o home ownership to the liability- reedom o renting.

Such are the seismic economic and social shi ts now underway. Indeed the traditional snobbery and stigmaassociated with renting (a waste o money as they used to be say be ore the onset o industrial scale negativeequity), will disappear aster than 100% mortgage o ers. I wonder what stories this generation o renters will tell theirgrandchildren?


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Rents all 6% in ourthquarter o 2008 Rents ell 6% between September andDecember, compared to alls o 2.1% in thesecond and third quarters o the year.

Supply o rentalproperties tops 20,000 With more than 10,000 new properties

coming on to the lettings market everymonth, the total number o propertiesavailable to rent in the country at any onepoint is above 20,000 - twice the level o early 2008.

Dublin rents hithardestWhile rents outside the capital ell 10%over the course o 2008, Dublin rents ellby 13.1% on average.

Da t.ie National Rent Index

-11.6% Rents ell almost 12% during 2008, with hal o the all coming in thenal three months o 2008. The average rent nationwide has allenrom over 1,000 in the rst quarter o 2008 to 885 in January 2009.


Daft.ie National Rental Index(Base: 2007 = 100)

2002 2003 2004 2005 2006 2007 2008 2009 January 98.1 85.5 81.1 82.8 87.6 95.7 101.7 88.5February 96.2 86.5 80.4 82.7 86.5 96.5 101.8March 93.2 86.7 80.2 83.6 87.0 97.9 101.0April 94.9 87.0 80.5 83.4 87.6 98.2 100.5May 94.8 85.8 80.8 83.9 90.0 100.7 99.3 June 93.4 85.3 81.2 83.8 90.9 101.6 98.4 July 92.1 85.1 82.1 84.5 91.3 101.6 97.9August 91.8 85.1 83.0 85.0 92.6 99.9 97.6September 91.0 84.8 83.5 84.9 93.9 100.3 96.6October 89.1 83.0 83.4 86.0 94.7 100.3 94.6November 87.6 81.9 82.7 86.8 94.3 100.4 91.2December 85.7 81.4 82.4 87.9 93.9 100.6 89.0

Stock of Properties to Rent (start-of-month)& Flow of New Properties to Rent (during entire month), 2007-2009

Stock Inflow Outflow

0

5000

10000

15000

20000

25000

2 0 0 7

F e b M a r A pr

M a y J un J ul A u g

S e p O c t N ov

D e c

2 0 0 8

F e b M a r A pr

M a y J un J ul A u g

S e p O c t N ov

D e c 2 0 0 9

F e b

The index is based on asking rents or properties advertised to let on Da t.ie. Figuresare calculated rom econometric regressions,which calculate changes in price that areindependent o changes in observablemeasures o quality, such as location, or

bedroom number.


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Da t.ie Snapshot o RentNationwide

What can I ask or? Can I aford it?Average rents across Ireland, by postcode/region andbedroom number, Quarter 4, 2008.

Daft.ie Snapshot of Rent Nationwide1 bed 2 bed 3 bed 4 bed 5 bed

Dublin 1 1,022 1,349 1,694 1,638 *

Dublin 2 1,128 1,496 2,228 2,438 *

Dublin 3 944 1,192 1,440 1,932 2,431

Dublin 4 1,140 1,511 2,117 2,921 4,466

Dublin 5 968 1,197 1,348 1,493 1,930

Dublin 6 927 1,306 1,890 2,716 4,558

Dublin 6W 946 1,291 1,549 1,972 2,849

Dublin 7 902 1,206 1,441 1,659 1,936

Dublin 8 955 1,232 1,516 1,768 2,181

Dublin 9 901 1,161 1,408 1,591 1,993

Dublin 10 1,011 1,098 1,191 1,449 1,400

Dublin 11 964 1,109 1,297 1,468 1,868

Dublin 12 959 1,122 1,305 1,432 1,637

Dublin 13 982 1,287 1,414 1,929 2,316

Dublin 14 1,051 1,307 1,630 1,936 2,504

Dublin 15 953 1,123 1,246 1,430 1,976

Dublin 16 968 1,299 1,452 1,574 *

Dublin 17 997 1,164 1,324 1,550 *

Dublin 18 1,125 1,331 1,556 1,841 2,720

Dublin 20 988 1,122 1,308 1,359 1,600

Dublin 22 886 1,070 1,218 1,367 1,679

Dublin 24 941 1,128 1,243 1,424 1,667

North Co Dublin 915 1,095 1,262 1,557 1,899South Co Dublin 1,063 1,363 1,697 2,365 3,119

West Dublin 949 1,104 1,263 1,461 1,719

Cork City 752 923 1,021 1,237 1,560

Galway City 689 868 977 1,042 1,190

Limerick City 593 739 856 983 1,034

Waterford City 578 702 788 886 1,009

Dublin Commuter Counties 725 869 945 1,105 1,308

West Leinster 515 611 672 750 835

South-East Leinster 577 681 747 841 879

Munster 554 694 765 867 940

Connacht 508 614 678 737 849Ulster 447 527 620 681 757


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Trends in Rents Across DublinFrom Quarter 1, 2006 to Quarter 1, 2009


Rents across Dublin ell sharply in the nalmonths o 2008, alling 5% or more on average.

Rents in South County Dublin have taken a10% hit in the nal months o the year and arenow 15% lower than a year ago.

Income rom renting a room is starting toall also, with the typical room in Dublin CityCentre 3-5% cheaper than three months ago.

Rent-a-room income trends

AreaAverage

rent% Q-onQchange

Averagerent

% Q-onQchange

Dublin City Centre 488

390

424

340

439

331

-3.2%

-1.8%

-2.8%

-4.8%

-0.7%

-2.6%

614

505

552

462

564

453

-5.4%

-3.8%

-2.8%

-5.1%

-3.8%

-3.6%

North Dublin City

South Dublin City

North Co. Dublin

South Co. Dublin

West Co. Dublin

Single Room Double Room

Average Rent by region in Dublin, 2006-2009

Dublin City Centre North Dublin City South Dublin City North County Dublin South County Dublin West County Dublin

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

2006:q1 2006:q2 2006:q3 2006:q4 2007:q1 2007:q2 2007:q3 2007:q4 2008:q1 2008:q2 2008:q3 2008:q4 2009:q1

West County DublinAveragerent: 1,111Year-on-year change:-9.2%Quarter-on-quarter change:-4.7%

North County DublinAveragerent: 1,107Year-on-year change:-7.8%Quarter-on-quarter change:-7.2%

Dublin City CentreAveragerent: 1,144Year-on-year change:-7.9%Quarter-on-quarter change:-4.7%

North Dublin CityAveragerent: 1,100Year-on-year change:-8.7%Quarter-on-quarter change:-6.3%

South County DublinAveragerent: 1,386Year-on-year change:-15.2%Quarter-on-quarter change:-9.9%

South Dublin CityAveragerent: 1,192

Year-on-year change:-10.0%Quarter-on-quarter change:-6.7%


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Trends in Rents in Other CitiesFrom Quarter 1, 2006 to Quarter 1, 2009


Average Rent by region outside Dublin, 2006-2009

Cork City Galway City Limerick City Waterford City

600

650

700

750

800

850

900

950

1,000

1,050

1,100

2006:q1 2006:q2 2006:q3 2006:q4 2007:q1 2007:q2 2007:q3 2007:q4 2008:q1 2008:q2 2008:q3 2008:q4 2009:q1


AreaAverage

rent% Q-onQchange

Averagerent

% Q-onQchange

Cork City Centre

Cork City Suburbs

Cork Commuter Towns

Galway City Centre

Galway City Suburbs

Limerick City Centre

Limerick City SuburbsWaterford City Centre

335

300

288

312

274

271

263 266

3.1%

2.0%

-1.0%

-2.2%

-4.5%

11.1%

6.9%3.1%

400

380

373

382

342

313

299 307

-2.7%

-1.3%

-3.6%

-1.3%

0.9%

-1.6%

0.0%-8.4%


Cork City

Galway City

Limerick CityWaterford CityAverage rent:782

Year-on-year change:-8.9%Quarter-on-quarter change:-6.0%

Average rent:726Year-on-year change:-4.0%Quarter-on-quarter change:-4.4%



Across Irelands main cities outside Dublin,

rents ell by between 4% and 6% in the nalmonths o 2008.

Cork city has been particularly a ected, withrents alling 10% in a year, and now stand closeto 900.

Rents in Limerick have allen below 800 orthe rst time since late 2006, while rents inWater ord ell slightly again.


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Trends in Rents-Rest o the Country From Quarter 1, 2006 to Quarter 1, 2009


Average Rent by region rest of country, 2006-2009

Dublin Com muter Counties Wes t Leins ter South-Eas t Leins ter Muns ter Connacht Ulster

500

550

600

650

700

750

800

850

900

950

2006:q1 2006:q2 2006:q3 2006:q4 2007:q1 2007:q2 2007:q3 2007:q4 2008:q1 2008:q2 2008:q3 2008:q4 2009:q1

Rents in Dublins Commuter Counties have

allen almost 10% in 12 months, with most o that all happening in the nal quarter o 2008.

Around the country, rents ell by close to 4.5%on average, although the all lin Munster in thelast quarter was somewhat steeper.

Rents in Ulster have allen least in the last 12months,dropping just 5% - almost all o thatcoming since September.


AreaAverage

rent% Q-onQchange

Averagerent

% Q-onQchange

Dublin Commuter Counties

West Leinster

South-East Leinster

Munster

Connacht

Ulster

312

229

261

230

234

212

-3.5%

-7.4%

-2.0%

-7.4%

-1.3%

-7.4%

394

290

309

282

284

263

-3.5%

-2.1%

-4.8%

-4.1%

-0.9%

-0.3%


South-East LeinsterAverage rent:708Year-on-year change:-6.4%Quarter-on-quarter change:-4.3%Munster


ConnachtAverage rent:632Year-on-year change:-6.7%Quarter-on-quarter change:-4.5%

UlsterAverage rent:592Year-on-year change:-5.1%

Quarter-on-quarter change:-4.5%

West LeinsterAverage rent:635Year-on-year change:-7.3%Quarter-on-quarter change:-4.7%

Dublin CommuterCountiesAverage rent:826Year-on-year change:-9.3%Quarter-on-quarter change:-5.7%


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First Time Buyer In ormation

Can we aford it? The mortgage cost, including mortgage interest relie and incomerom the rent-a-room scheme, by region and bedroom number.


Investor Information: Snapshot of yields across the country

Loca tion \ Bedroom # Average Change 1-bed C hange 2-bed C hange 3-bed C hange 4-bed C hange 5-bed C hange

North Dublin CitySouth Dublin CityNorth Dublin CountySouth Dublin CountyWest Dublin CountyDublin Commuter Counties

MunsterCork CityLimerick City

Average

Dublin City Centre

West LeinsterSouth-East Leinster

Waterford CityConnaught/UlsterGalway City

4.4%4.0%4.2%3.9%3.3%4.3%3.5%3.1%3.2%3.3%3.6%3.9%3.6%3.1%3.2%3.4%

0.3%0.1%0.1%0.0%

-0.1%0.0%0.0%0.0%

-0.1%-0.1%-0.1%-0.1%0.1%0.0%0.1%0.0%

4.6%4.5%4.2%4.7%3.7%5.0%3.7%3.8%

2.8%

3.6%

3.7%

4.0%

4.2%

3.9%

3.5%

3.9%

0.3%

0.3%

0.3%

0.3%

0.0%

0.2%

-0.1%

0.1%

-1.3%

-0.5%

0.4%

0.2%

0.1%

0.2%

0.3%

0.0%

4.3%

4.2%

4.4%

4.2%

3.6%

4.5%

4.0%

3.8%

4.2%

4.0%

4.2%

4.2%

4.1%

3.8%

3.2%

4.0%

0.3%

0.0%

0.2%

0.1%

-0.1%

-0.1%

0.0%

0.1%

0.2%

0.0%

0.1%

-0.2%

0.2%

0.0%

-0.1%

0.0%

3.9%

4.0%

4.4%

4.1%

3.4%

4.4%

3.7%

3.6%

3.6%

3.5%

3.9%

4.2%

4.0%

3.5%

3.8%

3.7%

0.4%

0.1%

0.0%

0.0%

-0.1%

0.0%

-0.1%

0.1%

0.1%

0.0%

0.0%

0.0%

0.3%

-0.1%

0.2%

0.0%

*

3.2%

3.5%

3.4%

3.0%

3.9%

3.2%

2.9%

2.8%

2.9%

3.1%

3.6%

2.9%

2.9%

2.9%

3.0%

*

-0.2%

0.0%

-0.2%

0.0%

-0.1%

0.0%

0.0%

-0.1%

-0.1%

-0.2%

-0.1%

-0.3%

0.0%

0.0%

0.0%

*

3.2%

2.3%

2.4%

2.7%

3.3%

2.9%

2.3%

2.5%

2.6%

2.8%

3.3%

2.3%

2.8%

2.3%

2.6%

*

0.2%

-0.6%

-0.6%

-0.1%

-0.1%

0.0%

-0.3%

-0.4%

-0.1%

-0.8%

0.2%

0.2%

0.1%

0.2%

-0.1%

First-time buyer information: Rent-a-room income and net loan burdenSingleroom

Doubleroom

1-bedno letting

2-bedno letting

2-bedletting 1double

3-bedno letting


3-bedletting 1doubleand 1single

4-bedno letting


4-bedletting 1doubleand 1single

Dublin City Centre 488390424340439331312229261230308267266

223293

614505552462564453394290309282384306307

274362

755673781651960606656450664511676581452

413630

1,0909239868471,225820713534537566732679552

508899

476418434385661367319243228284348373245

234537

1,7211,1561,1421,0251,682931836626671710884919650

611844

1,1076515905631,118478441335362428499613343

338482

61926116622367914712910710019719234677

114189

*1,7531,9931,5592,5731,2231,1718529719881,3311,0241,048

8091,216

*1,2481,4411,0972,009770777561662706947718741

536854

*8581,0177571,570439465333401476639451475

312561

North Dublin CitySouth Dublin CityNorth Dublin CountySouth Dublin CountyWest Dublin CountyDublin Commuter CountiesWest LeinsterSouth-East LeinsterMunsterCork CityLimerick CityWaterford City

Connaught/UlsterGalway City

Mortgage repayments are based on a standard loan application, with the ollowing terms: 35 yrs, ECB variable (3.25%), 85% LTV. Figures include deductions or mortgage interest relie (MIR), based on a joint mortgage application, with frst-time buyer status.


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About the Report

Over the last 10 years, Da t.ie has collected a vastamount o data on the Irish property market. In2008 alone, more than 330,000 properties wereadvertised on the site.

The goal o the Da t Report is to use this in ormation to help all actors in the property

market make in ormed decisions about buying and selling. In addition, because it is

reely available, the Da t Report can help in orm the media, the general public and

policymakers about the latest developments in the property market.

The Da t Report is now nearly three years old. It has already become the de nitive

barometer o the Irish rental market and is being used by the Central Bank, mortgage

institutions, nancial analysts and the general public alike. Since its introduction at

the start o 2006, the Da t.ie Asking Price Index is also being recognised as the earliest

available reliable indicator o developments in house prices in Ireland.

This is the Da t.ie Rental Report, the partner to the Da t.ie House Price Report issued last

month. Together, they give house-hunters and investors more in ormation to help them

make their decisions. These twin reports mean that Da t is the only objective monitor

o trends in both rental and sales markets on a monthly basis, making the report an

essential barometer or anyone with an interest in the Irish property market.

Methodology and Sample Size The statistics are based on properties advertised on Da t.ie or a given period. Theregressions used are hedonic price regressions, accounting or all available andmeasurable attributes o properties and only coefcients with a very high degree o statistical signi cance (p < 0.001) are used.

The average monthly sample size or sales during 2008 was over 13,000. Indices arebased on standard methods, holding the mix o characteristics constant, with the annualaverage o 2005 used as the base. A working paper on the methodologies employed inboth rental and sales markets is planned.

CirculationWe are pleased to announce that the average readership o the 2008 reports was over55,000 people.

About Da t.ieDa t.ie is Irelands biggest website*with one million unique visitorsa month and in excess o 150,000properties on the website at any onetime. In the last year trafc to Da t.iehas tripled.

The snapshot on page 5 coversthe period rom October 2008 to

January 2009. Snapshots are a highlygeneralised view o the market. They should only be used as anindicator o house prices and not asa de nitive guide as there are manyactors not included above thata ect prices.

* ABC Certifed, September 2008



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Disclaimer The Da t.ie Report is prepared romin ormation that we believe is collatedwith care, but we do not make

any statement as to its accuracy orcompleteness. We reserve the right tovary our methodology and to edit ordiscontinue the indices, snapshots oranalysis at any time or regulatory orother reasons. Persons seeking to placereliance on any in ormation containedin this report or their own or thirdparty commercial purposes do so attheir own risk.

CreditsEconomic Analysis:Ronan Lyons

Project Management:Naoise McNally

Layout and Editing:Derek Jones | Flavour 9 Design

All data is Copyright Da t MediaLimited. The in ormation contained inthis report may only be reproduced i

the source is clearly credited. Pleasecontact Da t.ie on 01-421 8700 orurther in ormation.

Coming Next

The Da t.ie House Price Report2009 Q1, In early April, 2009 The Da t.ie House Price Report will be published in early April 2009 and will

provide a county-by-county review o the housing market during early 2009 aswell as all the usual indices, snapshots, trends and regional analysis, providing thepublic with Irelands most up-to-date in ormation on the housing market.

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Daft Rental Report Q4 2008 - Year in Review

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