Published: Wednesday, 18th November, 2009 5:00pm

Average rent in Cavan is down 9.3% since peak

Good news for tenants and bad news for landlords: rents across the country have fallen to their lowest level in a decade, according to the latest report published by the property website, Daft.ie. The national average rent now stands at €771 - the lowest level in almost 10 years. Average rents have fallen 4% in the past three months alone.

However, the drop in Cavan is not as dramatic as that in Dublin or commuter counties close to the capital, Daft found. Whereas in Dublin rents have dropped by up to 22.9% since the peak in the rental market, the average rent was found to now be €522, representing a drop of 9.3% since the peak. In Monaghan, current average rent is €559, representing a drop of 16.4% since the peak. In Meath, rent now averages €708, which is a drop of 20%.

In terms of changes in the past quarter, Dublin rents were again most affected, falling 5% in three months. Rents in Galway remained static, while rents in Cork and Limerick cities fell by 2.5%. Waterford fell more sharply, down almost 4%, while elsewhere around the country, rents fell by an average of 3.8%.

The upside of lower rents, however, is that they seem to be attracting tenants, similarly to lower asking prices reeling in cautious buyers.

"While the number of properties available to rent is still at an all-time high, it would appear that these latest price falls are starting to have a positive effect on supply. In Dublin, where drops have been higher than average, the total number of properties available to rent fell by almost 8% in the past three months alone," commented Ronan Lyons, economist at Daft.ie.

He continued, "These recent falls in rent have pushed the average rental income back to levels last seen in 2000, which has much wider implications - NAMA was predicated on rents and yields remaining high between now and 2020. However currently the yield on residential property has risen by just 0.1% in the last year, to 3.4% on average, compared to the NAMA benchmark of 6%".

Meanwhile, Dr Charles J. Larkin, Department of Economics, Trinity College Dublin, put the findings in the context of a housing market on hold while waiting for an economic turnaround:

"Households, already saving heavily, are in the process of adjusting to what Nobel Prize winning economist Edward Phelps refers to the "new normal" of lower growth and higher unemployment over the medium term," commented Dr. Larkin. "Adjustments will take time and typically overshoot before a new equilibrium is established.

This may lead to fluctuations in the short-term, but long-term recovery in the housing sector cannot occur without the easing of credit markets and increases in real income," he said.

The Daft Rental Report is based on an analysis of all rental properties advertised on Daft.ie since January 2002, including over 130,000 since January 2009. Figures are calculated from econometric regressions using standard methods. Daft.ie is Ireland's largest property website, with 1,275,630 unique users.