The government has announced new measures to tackle the rental crisis. A limit of 4% year-on-year increases is proposed for Dublin and Cork.
Dublin’s rental prices are at a completely different level to other cities – Cork, Galway, Limerick and Waterford (as defined by daft.ie). A differential of €584 is shown above (rents are 38% cheaper than Dublin). The removal of Cork from “other cities” would widen the gap. Fianna Fáil’s intervention is well meaning, but not well supported by the data.
However, that’s not to say that the government policy is correct – as always, there are unintended consequences. The current two-year freeze on rent rises was initially met with attempts to increase before the freeze began. The IMF is concerned at the effect it may have on supply (it remains flat in 2016). Instead of the freeze, this policy sets an upper limit on rental increases. New supply may enter the market at a higher price to future-proof returns. Existing tenants will be protected at the expense of new ones.
There is no silver bullet here. We must tread carefully with policy. Dublin and Cork are good places to start, but they should act as pilot cities, before taking the policy elsewhere.