According to the latest data published by the CSO, average weekly earnings grew by 2.2 per cent on an annual basis in the second quarter of 2017. This compares to annual rent inflation of 6.6 per cent based on Residential Tenancies Board data.
The fundamental issue with the housing market in Ireland today is lack of supply. This applies to the rental market specifically and to the residential property market more generally. To address this, the Government's housing strategy Rebuilding Ireland - Action Plan for Housing and Homelessness adopts a whole of government response with 84 actionable measures across five key pillars and aims to increase overall housing supply by 25,000 new homes every year by 2020. The measures set out in the Action Plan aim to stimulate supply by streamlining the planning system, removing infrastructure blockages and supporting the delivery of affordable housing for both first time buyers and purchasers of family homes.
More recently, the Government has been engaged in a review of Rebuilding Ireland, in order to assess its impact and to consider additional actions to address issues with supply in the housing market. Further to this, in Budget 2018 an additional €500 million was allocated to build an additional 3,000 social housing units by 2021. Furthermore, funding of €750 million from the Ireland Strategic Investment Fund (ISIF) is being made available to a new vehicle - Home Building Finance Ireland – to boost the supply of debt funding to residential development. These measures are intended to increase the supply of both private and social residential properties and thus ease inflationary pressures in the market.
The Government has also sought to specifically address rent inflation through the introduction of Rent Pressure Zones (RPZ). These measures have been introduced to address inflation in rental prices within designated areas. There are signs that this measure, as well as government initiatives more broadly, are beginning to moderate rental prices. For example, in Dublin the rate of increase in the second quarter of 2017 (5.8 per cent) is at its lowest since the second quarter of 2013. The Government will continue to closely monitor developments in the rental sector and the housing market more generally.