The website Irish Property Watch has released its latest figures show that from the the 9th to the 16th of November 2008 there were 1,896 rent reductions out of an available stock of 19,349. The average reduction was €93 per month.
The ever popular website thepropertypin.com posted a thread about this and one interesting observation was that perhaps the ECB rate reduction has accelerated the drop in asking prices on the rental market. Why? Because owners of a pincer movement created by falling rates and vacancies. There are many empty properties on the market and that means supply versus demand has a distinct advantage on the demand side, there are too many properties on the market both for sale and for rent. That would lead to a downward trend in asking prices.
The rate drop has an impact on the supply side, now that repayments are dropping landlords will likely price down to meet low demand and secondly because they can service the loan for less now that interest rates have dropped.
The figures are based on ‘asking prices’ for the rental properties and not the actual agreed prices on any of them as any private negotiations remain between the parties to the lease contract. Average rents have fallen – at least the published asking prices- by about 20% in the last 4 months, many feel that the immigrants to Ireland will now become emigrants and this will exacerbate the situation.
Shops which cater to emmigrants are closing in many town centres, this is likely due to the fact that they are losing a client base as people return home now that Ireland does not offer the booming opportunities that it did in the past. Bloomberg reports that 30,000 members of our Polish community have already left with a further 35,000 to follow next year.
In our opinion the outlook is, at least for the short term future one in which property prices will continue to fall, monetary stimulation will likely cause the market to level out in the short term but recovery will be muted for some time, as regards the timing of a purchase it is anybody’s guess, although we do feel that a strong look at 10 year fixed rates would be a good idea because at the end of the rate cuts and bail outs there will likely be a strong period of inflation.