This morning, Ireland’s number one residential property website, Daft.ie published its quarterly rental report which showed asking rents has increased by 2.7% in the past year. This supports the results of the monthly CSO index which shows actual private sector rents had increased by 3.4% in the past 12 months. Rents are rising, it seems, albeit at a relatively modest pace. The CSO doesn’t analyse rents by area, but Daft.ie does and it says that rents in Dublin are up 5% in the year whilst provincial rents are up just 0.2%.
A question often asked about NAMA is whether or not it is distorting the rental market by withholding property. This is an understandable question, after all NAMA is a colossal company, now controlling €23bn of loans (down from €32bn which was its acquisition value and the original par values were €74bn).
But NAMA does not really have a very large impact at all on the residential market. We previously learned that NAMA has 14,000 homes securing loans under its control. This is in a State which has 2m homes in total. And of the 14,000 homes, 10,000 are already rented out mostly in urban areas. The other 4,000 are available for sale or rent.
When asked in the Dail last week, the Minister for Finance Michael Noonan pointed out that the last Census 2011 results showed that there were approximately 320,000 private rented properties in the country, so NAMA’s 4,000 which are vacant and available for sale or rent are not sufficient to distort the market.
As Daft.ie’s economist, Ronan Lyons says today, it really does seem that there are supply constraints in some areas which are driving up prices. Unfortunately with existing building costs, there is no sign of waves of development to meet the demand, so it would seem in some areas prices may be set to continue to rise until it becomes attractive to build again.
The parliamentary question and response are here:
Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Question No. 91 on 21 March 2013, if he considers the 4,000 homes that the National Asset Management Agency controls which are vacant to be distorting rent levels in the urban areas where NAMA says the majority of its housing is located. [18450/13]
Minister for Finance, Michael Noonan: As advised in the response to Parliamentary Question No. 91, all properties securing NAMA’s loans are ultimately available for rent or sale. As advised in my response to Parliamentary Question 91, of the completed residential property securing NAMA’s loans, approximately 10,000 units are currently rented, primarily in the private rented market. The residual NAMA residential stock is being actively marketed for rent or sale by NAMA debtors and receivers at market prices or has been made available for social housing or is currently being marketed under the Agency’s 80/20 Deferred Payment Initiative. According to the most recent Census there are over 320,000 private rental properties in the country. Therefore, the scale of NAMA’s vacant homes is not large enough to distort the market.