Last month, the latest Daft.ie Rental Report showed just how bad the market is for today’s renters. Rents are now up by 70% in Dublin from their lowest point, in late 2010, while elsewhere in the country they have risen by 45% on average – although this hides significant variation by county.
Not only do rents continue to increase, they are doing so at a faster rate: for the fifth quarter in a row, rents rose by at least 10% year-on-year. It would be a brave civil servant who would argue that Rent Pressure Zones are working.
As ever, prices are just a symptom, though. The underlying cause is a lack of supply. There were fewer than 3,000 properties available to rent nationwide on the 1st of August this year. That’s not only down almost 20% on the same date a year earlier, it’s also the first time ever that fewer than 3,000 homes have been available to rent.
The last time the rental market was experiencing anything like this was in early 2007, when rents were increasing at roughly 11% per year. Even then, though, there was an average of 4,800 properties available to rent at any one time – roughly half those in Dublin.
Now, though, availability in Dublin is close to 1,000. Comparisons with ten years ago also understate the issue: the number of people renting has risen by more than 50%. If 5,000 homes to rent was a tight market 10 years ago, the equivalent tightness today would be 7,500.
This sort of rental crisis is unprecedented and is clearly linked to the homelessness crisis. Healthy housing markets are built on a number of key ingredients. One of these is the presence sensible mortgage rules, which we had through the Building Society system from the 1860s until the late 1980s, and again since the Central Bank rules came in in 2015.
A second key ingredient is a responsive social housing sector. Ireland had this more or less from independence – but it was dismantled steadily from the 1980s on. By the mid-2000s, loose lending was taking the place of social housing.
But we know have a combination of mortgage rules but no social housing. Never before in postwar Ireland have we had this combination, which is what makes the homelessness crisis so severe.
Into this environment step our fledgling households, those starting college for the first time this month. What chance do they have? Many students are already choosing not to study in Dublin, even if a course there offered them the best prospects, because of the cost or the lack of a home. Many more are commuting very long distances to try to make things work.
As a society, we should be happy with neither of these as solutions. Even leaving aside the potential for higher education as a lucrative export industry, we should be trying to ensure that our students have the supports necessary to fulfil their potential.
What is obvious from a quick glance at the figures is that we are failing them, particularly when it comes to their accommodation. In the UK, roughly half of all students who don’t live with their parents live in purpose-built student accommodation, either on- or off-campus.
In Ireland, roughly 35% of students – rather than the 10% seen in the UK – live at home with Mammy. Of the remainder, only a small fraction– a little more than 10% – live in purpose-built student accommodation. This of course puts pressure on the wider rental sector, as students group up and take family homes out of circulation.
What is truly frightening for me, as an outside observer, is how ill-prepared our policymaking system is for the future. We know from demographics that the number of third-level students is set to grow by at least 50% over the coming decade. Factoring in likely increases in enrolment and in net migration, as well as the targeted increase in non-EU students, student numbers in Ireland may double over the coming 15 years.
Suppose we allow for one third of Irish students to stay with Mammy. Even reaching the UK ratio of one student in purpose-built for every student in the wider rental sector would mean a dramatic increase in purpose-built student housing over the coming decade.
The country needs to plan for having 100,000 units in purpose-built student accommodation by 2025. It currently has about one third of that. Put in its simplest terms, Dublin needs to be seeing a new block of 300 student beds opening every months for a decade – while the rest of the country (as a whole) needs to see roughly the same.
But with Dublin City Council already trying to change the rules to make it easier to say no to proposals for student beds, what are the odds that this will happen? Sadly, unless a change in mindset happens fast, we are likely to read grim news on student housing and the rental sector for some years to come.
An edited version of this post was originally published in my column in the Sunday Independent.