Increased rental returns have sparked a surge of interest by investors in buy-to-let property in Donegal, according to leading Letterkenny estate agent.
The growing imbalance in supply versus demand has caused rental returns for landlords to rise by almost 7% in the third quarter of this year.
According the latest report from Daft.ie, the average rental rate advertised in Donegal is now €561 – a hike of 15% from their lowest point in recent years.
Kiara Rainey, of Sherry FitzGerald Rainey, said: “First time buyers are in competition with investors for a limited number of properties and the lack of stock is driving rental returns through the roof in Letterkenny.
“Letting agents are reporting that four-bed semi-detached homes in good condition are renting for around €750-800 per month. That’s compared to rental returns of between €390-€400 per month for similar properties just a couple of years ago.
“Three bedroom semi-detached houses in need of some capital expenditure are currently selling in Letterkenny for €90,000 to €100,000 and an increasing number of buy-to-let investors are now seeing great opportunity for high rental returns.
“The low supply versus high demand situation is having an impact on prices already. Adding high rental returns – which are attractive to investors – into the mix will inevitably drive house prices up in Letterkenny.
“Over the last 18 months property prices in the town have been creeping up. It is very difficult to predict just how much the rising rental incomes will accelerate that but they will certainly fuel the process.”
