Private rent indices in Ireland: A brief guide

[Skippy_3]

Private rent indices in Ireland: A brief guide
There has been a bit of confusion on another thread about what the different measures of private rents in Ireland. I’ve put a brief guide together which I hope is informative.
There are three: [*CSO * (https://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=CPM13&PLanguage=0), [*daft.ie * (Irish House Price Report Q4 2022 | Daft.ie), and [*PRTB/ESRI * (https://www.prtb.ie/landlords/rent-index-dec-2014). Before I go through the merits and drawbacks of all I’ll go through the characteristics of a good price index.

**What should a good price index have?
**Timeliness: It should come out as soon as possible after the period surveyed
Coverage: At least a representative sample of the population
Hedonics: the mix of housing should be adjusted for. A slew of four-bedroom properties coming on the market in a particular month by chance should not cause the index to jump
Sub-indices: ideally, sub-indices by type of dwelling and location should be generated
Includes rentals in payment: Ideally, the index should include all rents being currently paid in a particular period, not just new leases
Seasonal adjustment: seasonal patterns should be identified if present and corrected for
Machine-readability: for ease of use, extraction in machine-readable format should be facilitated.
Length: a longer series is more useful

CSO
The CSO collect many, many prices to generate the CPI. As such private rents should be seen as a *component *of the CPI rather than as an end product in itself. The methodology documentation is not clear on how they generate the private rent index but I suspect it includes a survey of estate agents for a mix of property types in a mix of locations. The CSO does not produce sub-indices by region or for apartments. The advantage of the index is that it goes back the furthest and can be downloaded.

**Daft.ie
**The daft index was both novel and useful when it first came out. It uses the population of asking rents on daft.ie, hedonically adjusted. Daft’s coverage of the rental market has been very large for a very long time. Sub-indices by dwelling and area are produced. The (slight) downside is that it only includes asking rents. This has caused it a lot of slagging on the pin over the years, undeserved in my opinion. Asking and actual prices may diverge a little (especially around turning points). But in the long run asking prices are probably an unbiased estimator of actual prices. The only annoyance for me is that it is not downloadable anywhere from what I can tell.

**PRTB/ESRI index
**The PRTB/ESRI index is based on all tenancies registered with the PRTB since 2007. It was first published early 2013. So it has the best coverage of the bunch. It is also hedonically adjusted and sub-indices are produced. Unfortunately it is not nearly as well publicised as either the daft.ie or CSO indices. This is a shame at is probably the best of the lot. The only bugbear is that I cannot download it in machine-readable format anywhere.

FWIW the PRTB are best in class when it comes to innovative use of data by a public sector body. They’ve recently added a facility on their website for you to check average rents by type of dwelling.

[2Pack]

@Skippy 3

**PRTB/ESRI index

The only bugbear is that I cannot download it in machine-readable format anywhere.

**

The CSO stats direct database host the raw data for the PRTB

cso.ie/en/search/index.html?q=PRTB

HTH

[Skippy_3]

Exactly Mantissa. As a result the index will be a little more volatile than if it accounted for all rents in payment.

My own view is that rents for new tenancies in Dublin have topped out for now. This still means that tenants with renewals coming up will likely have to pay more.

[Andy]

@Mantissa

Thanks for that Skippy.

Worth noting that the PRTB index only gathers data when a tenancy is registered; therefore it will be a leading indicator and skew towards new rents. If rents are changing rapidly, 90% of the market may be paying a lower or higher “older” rent but the index will represent the new 10% instead.

Is it fair to say it represents “market rents”?

[Eschatologist]

@Mantissa

@Andy

@Mantissa

Thanks for that Skippy.

Worth noting that the PRTB index only gathers data when a tenancy is registered; therefore it will be a leading indicator and skew towards new

rents. If rents are changing rapidly, 90% of the market may be paying a lower or higher “older” rent but the index will represent the new 10% instead.

Is it fair to say it represents “market rents”?

Not sure what that means these days TBH. In a time of significant change (up or down) the market for new tenancies could be very different than the “market” in renewals. The PRTB should give an accurate measure of market rents for new tenancies, but will not reflect the rents that the vast majority of people pay.

Ah now, market price is a fairly well understood concept. For rents it’s what the property would rent for as a new tenancy.

There is no “market” for renewals, which is why you’ve presumably put it in quotes.

[Skippy_3]

Average rents are probably some kind of lagged function of “market” rents. I’d say a 2-or 3-year moving average would make sense.

In the long run they will average out though.

[Skippy_3]

Good question. I couldn’t find anything in the CSO QNHS data.

Census 2011 has private rented households at 305,000 (stock). It might have risen a bit since then but not by much I’d say. PRTB annual report puts new tenancies at 112,000 (flow).

So dividing stock by flow suggests that a new tenancy is registered about every 3 years per unit.