2024 Q2 Midlands Real Estate Rental Market Analysis
Author: Ronan Lyons, Associate Professor in Economics, Trinity College Dublin
Addressing the Ongoing Rental Housing Crisis
More than a decade into a persistent rental housing shortage, the conversation ideally would have shifted towards the gradual spread of effective solutions. Instead, we find ourselves revisiting the core issue: insufficient supply of market rental homes across key regions in Ireland, including Laois, Offaly, Westmeath, and Kildare. The solution remains clear—expanding the supply of rental homes in large volumes across every rental market, from major cities to rural towns.
Market Developments in the Midlands and Beyond
Dublin’s Brief Improvement
From mid-2022 to late 2023, Dublin experienced a period of recovery in its rental sector, bolstered by the completion of new rental homes. This led to a reduction in rental inflation, from a peak of 14.3% in mid-2022 to a more manageable 2.6% by the end of 2023. The number of homes available for rent in Dublin increased to over 1,400 by the final quarter of 2023, up from just 800 a year earlier. However, this improvement was only a partial solution. Historically, Dublin had around 3,500 homes available for rent at any given time in the 2000s and 2010s. The recent rise to 1,400 units represents just a quarter of the necessary increase.
By August 1, 2024, the momentum had stalled, with fewer than 1,350 homes on the market—effectively a 1% decrease compared to the same date the previous year. The significant gains in availability witnessed over the past sixteen months had evaporated, indicating a return to constrained supply.
Outside Dublin: A Grim Picture
The situation outside Dublin has been less optimistic, particularly in the Midlands regions of Laois, Offaly, Westmeath, and Kildare. With most new rental supply concentrated in the capital, regions outside Dublin saw little relief. From 2016 to 2019, excluding Dublin, the average number of rental homes available hovered just above 2,500. This figure plummeted to below 1,000 during 2022 and 2023 and has remained stagnant. As of August 2024, fewer than 900 homes were available to rent across the country, excluding Dublin. Notably, key urban centers like Cork, Galway, Limerick, and Waterford combined had only 150 homes available at the start of the month.
Midlands Real Estate Market Dynamics
In regions such as Laois, Offaly, Westmeath, and Kildare, the lack of available rental homes has significantly impacted affordability. Supply shortages directly correlate with rising rent levels. Over the past two years, open-market rents in Dublin rose by 12%, whereas other cities saw increases double that rate. This trend highlights the growing rental crisis beyond the capital. Since the pandemic, Dublin rents have climbed by 26%, while other cities have seen an average increase of 52%.
Policy and Economic Implications
Policy Inaction and Economic Shifts
Ireland’s housing policy has actively promoted the construction of new rental housing for only four of the past twelve years. Even within these four years, efforts were severely disrupted by the COVID-19 pandemic. Between 2018 and 2022, a favorable macroeconomic climate, alongside the Strategic Housing Development (SHD) process and the Build to Rent (BTR) code, fostered a robust pipeline of proposed rental homes, estimated at up to 100,000 units.
However, shifts in the macroeconomic environment—particularly the increase in yield required to retain investors in the housing sector—have necessitated even stronger policies to encourage the construction of rental homes. Unfortunately, both SHD and BTR policies were subsequently abandoned. These policies were likely scrapped due to the long lead times inherent in housing development, which delay the market’s response to price signals.
Future Outlook for Rental Markets in the Midlands and Beyond
The removal of pro-rental policies just as their positive impacts were becoming apparent is particularly unfortunate. Reinstating these policies is not merely a discretionary option but a critical necessity for stabilizing Ireland’s housing market by the decade’s end.
Midlands Market Snapshot: Q2 2024
- Laois: Average rent: €1,556 (13.4% YoY increase)
- Offaly: Average rent: €1,542 (10.3% YoY increase)
- Westmeath: Average rent: €1,655 (12.1% YoY increase)
- Kildare: Average rent: €1,983 (10.1% YoY increase)
These figures indicate that while rents are rising sharply, the Midlands still represents a more affordable alternative to Dublin, emphasizing the opportunity for Midlands Real Estate to attract prospective tenants and buyers seeking value outside the capital.
