Tuesday, December 23, 2008

Renters are getting some too

Consider the folowing three pieces of information which we can use for some crude mathematics.

  • The Department of the Environment reports (Excel) that there are 188,152 private rented accommodations registered in Ireland.
  • Daft.ie estimates that in October the average rent in Ireland was €1,300
  • In the latest CPI release the CSO reports that rents fell by 6.1% in November.

A quick calculation shows that this reduction results in a saving of €15 million per month in the rental sector for consumers, coming in at €180 million for a full year.

How accurate is this? Let's see.

The total number of rented accomodations is based on registrations with the Private Residential Tenancies Board (PRTB). Not every tenancy is registered so this is the lower bound of the total.

The calculation from Daft.ie is based on asking rents on their website which may be different from the actual rent on the tenancy. This is an average of a small subet of rents, i.e. those advertisied on Daft. Also most tenancies will be in place for a period of time which means that actual rent may be different from the asking or agreed rent in tenancies starting now. Finally, this average doesn't take into account the size or number of residents in each tenancy.

The CSO figure stands up to scrutiny (apparentlty!).

Still, the point remains. The reduction in rent, and any further reductions, result in substantial savings for renters. And it's likely that landlords have been gaining too as interest rate reductions should more than offset the drop in rents.

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