Rent prices on the rise

Rents, which are rising faster than purchase prices, are continuing to make sectors of the residential property market attractive to investors. However, the latest Daft report on rental trends suggests that investors need to be choosy, not alone about where they buy but what they buy. For instance in Dublin North county a five-bedroom house may offer a return of only 3.2pc, whereas a two-bedroom property in the same area could offer more than double that or 7.5pc. Furthermore with demand for rental accommodation continuing to exceed supply, the report suggests that rents may also continue to rise and this in turn may also put upward pressure on prices at least in parts of Dublin and some other cities. So investors who entered these growth sectors of the market recently may look forward not only to improved rental returns but also to improved capital gains, especially if they buy before the end of this year when they could benefit from a tax-free return on profits from properties held for seven years.