BETWEEN 80,000 to 100,000 apartments need to be built in Cork over the next two decades to tackle a rental crisis of “significant proportions”, a UCC expert has warned.
The latest rental report from property website Daft.ie shows the average monthly rent in the city has reached €1,366.
This represents a rise of 7.9% on the same period last year, prompting concerns that plans for population growth could be compromised if affordability issues are not tackled.
Under the National Development Plan 2040, the population of the city is expected to grow to 360,000.
Dr Frank Crowley, a lecturer in UCC’s School of Economics, said the supply of apartments needs to rapidly increase.
“Rents are on average €300 more expensive than the rental heights of 2008 already in Cork city. We are well and truly in a rental crisis of significant proportions,” Dr Crowley told The Echo.
“There is a number of build-to-rent schemes at pre-planning and submission stage in Cork but a key issue is there is very little happening in the rental space in the city.
"Supply needs to radically improve if we are to see any decent affordability return to the market.
“In my opinion, to reach Ireland 2040 goals... Cork needs around 80,000 to 100,000 apartments by 2040. Currently, I expect we will fall way short of that number," Dr Crowley added.
According to Daft.ie's latest rental price report, a one-bed apartment in Cork city will see renters fork out roughly €1,040 per month, while a leased three-bed house will cost €1,358.
It’s much cheaper to rent in the county but prices are also increasing here at rapid rates. A one-bed apartment has increased by 14% to €730 per month, while a three-bed house comes in at €962.
Cork Chamber chief executive Conor Healy said delivery of apartments in the city needs to increase sooner rather than later.
“There is a direct relationship between not having sufficient supply in the market and the price of rent,” Mr Healy said.
“From a business perspective, we simply don’t have enough available accommodation, particularly in the city centre.
“The evidence is, if you look across the city at the moment, all the major developments that are taking place are everything other than apartment developments. That speaks for itself,” Mr Healy added.
The biggest apartment development planned in the city is at the site of the Sextant Bar on Albert Quay where the JCD Group is planning 200 build-to-rent units. It is the largest rental project in the city in over a decade.
City councillors and politicians have repeatedly said that developers are not attracted to build rental accommodation because it is not economically viable and many have called for VAT reduction incentives to stimulate builds.
Across Munster, rents rose by an average of 12.3% in the year to June 2019 and are now 22% above their previous high in early 2008. Rents rose by an average of 6.7% nationwide.
It is the thirteenth consecutive quarter of record rents.
Ronan Lyons, author of the Daft Report, said a slowdown in rental inflation is likely driven by limits to affordability rather than improved supply.
“Building new rental supply remains critical to fixing the rental market," he said.