Dublin rent hikes
Recent figures suggest rent prices have risen in Ireland’s capital Dublin. These figures go hand in hand as to what the Troika (EU, IMF, ECB) predict in recent growth figures for Ireland GDP growth rate in their quarterly review. The Troika predicted that Ireland’s GDP will rise in 2015 or 2016 as a result of construction in the capital. Housing in Dublin is running short in supply and further houses will have to be constructed in years to come. There are many reasons for this unprecedented return to construction in the capital. Firstly is the lack of language skills and specific talents that are needed for certain jobs that are currently available in Ireland’s capital and will be available for the foreseeable future. The result of this situation is that foreign talent are being hired to fill the skills gap in the Irish labour market. Migrants to Dublin for working purposes need accommodation.
Secondly house prices dropped significantly throughout the country with the capital no different. The spike in the drop of property in the capital has now flattened and beginning to rise again. This in turn allows the purchase of property with less chance of a loss of value promoting investment back into the property market.
Thirdly is inward migration. The Irish rural economy was hit severely since the bursting of the Irish property boom that existed between 1999 to late 2007. Unemployment in rural Ireland rose drastically which has resulted in large scale emigration and inward migration to urban areas especially to Dublin which is central to Irish commerce and employment.
A return for construction
There has been negative talk about there never being a construction sector in Ireland. However the reality is that all economies are cyclical, therefore the Irish economy will come back. Most likely the GDP growth rates will not be of the magnitude experienced back in the property bubble times.
The Irish Economy
When building starts again in the next few years, GDP figures will rise and unemployment will again drop as a result for labour required for the construction industry and the related material markets and industries. However construction in Ireland will probably be solely located in urban areas since there is an oversupply of houses and property in the rural locations. Rent prices have increased on an average of 7% over the past year. This large increase would suggest that there is a need to start building again to meet demand in the capital.