The Dublin rental market is less affordable for lower income households than some of the world’s most expensive cities, including New York, San Francisco and London, according to a report published on Tuesday.
A new analysis of the Dublin rental market by Goodbody stockbrokers shows rents in the capital became five per cent less affordable in the past year, with Dublin now the fourth most expensive city for apartment rents in Europe.
Suggesting lower-income households are hardest hit by such increases, the report cites a narrower gap between the cheapest and most expensive rents in Dublin compared to other cities.
In Dublin, two-bed apartments in the most expensive districts are 1.8 times the rent of those in the cheapest areas, compared to a spread of 3.8 in Paris, 3.2 in New York and 2.4 in San Francisco.
“In most comparable developed cities, our analysis shows the difference between the top and bottom quartile is over triple the rent, but in Dublin it is only 1.8 times,” according to Goodbody senior real estate analyst Colm Lauder.
The “erosion of affordability” primarily affects low and middle-income earners, with many having to pay a large proportion of their disposable income on rent.
In addition, tenants in other cities have better social housing options, Mr Lauder said.
Dublin has fewer affordable options within practical commuting distances because of poor public transport: “There are more limited locations you can move to make savings on your rent,” he said.
Better-off tenants in Dublin, however, face less rental pressures than those in other major cities. In Dublin, a high-end, 93sq m (1,000 sq ft) “executive” apartment consumes 60 per cent of a tenant’s average disposable income.
In London, however, the rent for a similar apartment is more than 100 per cent of average disposable income, while it is close to 100 per cent in Lisbon, Paris and New York.
These figures are important during the current Brexit debate and the expansion of Dublin’s tech industries since “rental affordability in these high-value professions is less of an issue versus peer markets”.
Downsizing difficulties
Meanwhile, older people in Ireland face “practical obstacles” if they wish to move to smaller properties, though there is growing potential for such moves to free up properties for younger families.
A survey undertaken for property investment firm Lotus Investments found that 74 per cent of retirees would consider downsizing if certain desires are satisfied, such as a garden or room to entertain family and friends.
“People would countenance the idea subject to certain conditions being met, but it is the case that in reality a lot of these hypothetical conditions aren’t being met,”said Dr John McCartney, head of research at Savills Ireland.
“There isn’t a lot of trade-down apartment stock that could accommodate all your much-loved furniture, or meet the requirements of people,” he said, adding that efforts to cut apartments’ sizes hinders “downsizing”.
David Grin, the chairperson of Lotus, nonetheless said that downsizing “is likely to receive a lot more airplay in the months and years to come, as the supply of property continues to fall short of demand”. Grin, along with a group of US financiers, has put hundreds of millions into Lotus in recent years. He was previously known for making $49 million (€43.5m) on an investment in adult publisher Penthouse.
