O’Donnellan and Joyce witnessed a lot of inquiries for every property brought to the rental market. This of course varied on price range but rents overall were stronger than 2020. By Q2 2021 the market was back in full swing with a huge demand for properties and high prices being achievable. Where no restrictions applied, the rents exceeded previous prices achievable. This shows the pent up demand there was and the need for accommodation.
Jamie Costello, director of rentals at O’Donnellan & Joyce, commented: “Many people returned to Galway city after long periods in lockdown in their native counties. This led to a sharp rise in rents with the demand coming at the same time. Out of city suburbs have gotten even more popular due to working from home opportunities offered by employers to attract talent.”
The lack of construction during Government lockdowns led to a further reduced amount of housing stock being completed. This kept more people in rented accommodation. The increase in construction supplies has also had a major impact on pricing existing and new housing developments. The construction prices have rose 30 per cent and this is having an impact on the end user. The rental prices rose 10 per cent last year as a result of the demand.
Government restrictions on rents and increased legislation protecting tenants has played a huge part in the worsening supply of rental properties. Landlords are leaving the market due to increased pressures regulation and high sales prices. For every 10 rental properties sold only one is being purchased by an investor. This is further reducing the amount of rental stock on the market. This is mainly down to the shift in landlord type. Traditionally small landlords with one or two properties would have managed residential tenancies themselves. The complexity of residential tenancy legislation requires a qualified agent with an in depth knowledge of the ever changing legislation. New landlords recognise this and appoint a property manager to look after their assets. This is a logical approach for investors who are looking at long term returns and wish to ensure their assets are being protected with proper management. O’Donnellan and Joyce has seen its property management instructions rise by 17 per cent in 2021.
Existing landlords selling up is leaving a gap in the market for keen cash investors to purchase properties. Cash buyers are the preference for all sales as they can close deals quickly, and investors are using this to their advantage. Currently cash funds in the bank are losing money and with inflation at its highest level in years, property is attracting investors attention. Jamie Costello added: “O’Donnellan & Joyce have seen a large amount of investors purchase through auction and private treaty this year. Our sales team have been very busy while the rental division has had its busiest year to date.”
The market is performing very strongly for Q4 2021, it is showing no sign of easing off next year. Therefore it is predicted that rentals in 2022 will continue to perform well with rental prices and demand remaining strong. There should be a small release of pressure with the backlog of properties being completed as well as people choosing to relocate to their native areas to work from home. The market should remain strong rents rising slightly but it shouldn’t rise much above three per cent.
The buy to let (BTL ) market will remain strong in 2022 as inflation and negative interest rates in banks continue to punish those with cash in the bank. The huge demand for rental accommodation makes the BTL market attractive. O’Donnellan and Joyce will be on hand to provide the required professional management advice to investors.
