Resaons to buy-to-let According to Ronan Lyons, economist with Daft. ie, and author of the Daft Report, the first six months of this year saw a shift from a soaring sales market to a soaring rental market instead.

"Rents have risen in both absolute and year-on-year terms each quarter since late 2004. Recently, the pace at which rents have been rising reached record speed, and the first quarter of 2007 saw rent increases of 10.8% compared to the same period in 2006. In the second quarter this figure increased to 12.4%, " says Lyons.

"With house prices now static, all eyes are on the rental market to see what's next for Ireland's property market. A healthy rental sector that absorbed a shift in supply from sales to letting would reassure people of the fundamentals and steady the nerves. A faltering rental sector, though, with rapidly rising inventories and tumbling rents, would not augur well for house prices over the next two to three years, " says Lyons.

Alan Brady of Accommodation Letting Ltd, agrees that the rental market has never had it so good as now, much of which he feels is driven by a combination of firsttime buyers holding off on purchasing, and the vast number of overseas workers continuing to come to Ireland.

"We have a one-bed apartment in Rathmines, which this time last year we rented out for 950 per month. That same apartment is now available for 1050 per month.

Most of our city centre apartments that were 900 per month last year, have increased to 1100, " says Brady, adding that a threebed apartment in Smithfield which rented for 1650 per month three years ago, is now achieving a rent of 2200.

Carol Strong of Douglas Newman Good agrees the rental market has really taken off in the last few months. "An example of how rents have risen in Dublin is that where 12 months ago a two-bed apartment in Cork Street would have cost between 1,100 - 1,200 per month, they are now up to 1,500, and in some instances, 1,600.

A one-bed that would have been 900 per month late 2006 is now fetching between 1,100 - 1,200, " says Strong.

Elsewhere in Dublin, rents are also very strong, according to Niall Clarke, Lettings manager with Lowe & Associates. "Well-presented apartments and houses rent very easily, particularly if they are near good transport links, " says Clarke, adding that even neighbourhoods further out from the city centre achieve good rents. "Tallaght is popular, particularly with foreign workers, who like being close to the Luas. Most Europeans living here are used to very good train services, so we often find they snap up rental property anywhere on the Luas or Dart, " says Clarke, who says that 1,200 is the average monthly rent for a two-bed in Tallaght, and 1.500 for a three-bed.

A sensible way to buy your first home and make some income at the same time is to consider purchasing a property with a spare room to rent.

Under the rules of the Rent-aRoom scheme, homeowners can earn 7,620 in tax-free rent, although the property must be the principal residence of the owner to qualify.

According to the most recent Daft report, renting a room was the most efficient way to buy a three-bed house in the Dublin area, and just pay 1,000 a month for it. "The mortgage on a typical threebed in West Dublin is 1460 per month after claiming mortgage interest relief. Taking away the income generated from renting a double room at 451 per month leaves new owners with a monthly cost for buying the property of 1009. The average rent for such a property in West Dublin currently stands at 1,297, " claims the report.

Why not to go buy-to-let Most letting agents will tell you that the rental market is booming largely because of the huge foreign workforce currently needed to keep the Irish economy buoyant.

"About 80% of west Dublin is rented out to foreign workers, and about half of the enquiries we get for the Rathmines area are also from foreign nationals looking for accommodation close to the city and their workplace, " says Niall Clarke. Dundrum and Sandyford are also very popular with overseas workers and their families because there is an abundance of highquality modern accommodation and easy access to the city with the Luas.

But if we are to take on board some of the more pessimistic or perhaps realistic economic forecasts, our muchneeded overseas workforce may not hang around if employment levels drop. And with the US dollar currently quite weak against the euro, there is always the fear that some of the big US employers, particularly in the IT area, based in Ireland will pull out as their euro wages bill becomes too high.

Added to this, employment in the building industry is set to fall. There are currently around 300,000 people employed in the building industry, compared to less than 100,000 back in 1994, largely due to the fact that last year we built a massive 88,000 homes compared to just 57,000 back in 2002. According to the OECD, Ireland has the highest rate of house building in the EU per head of population, around 26% above sustainable levels. Latest figures from the ESRI forecast new house completions this year will fall to 76,000, dropping to 65,000 in 2008, all of which will result in lay-offs in the building industry. And with vast numbers of foreign workers employed in construction, unemployment may result in their returning home or moving to another country for work, and leaving a glut of rental properties in commuter towns and large swathes of west Dublin, resulting in rental properties becoming more plentiful, cheaper and harder to sell.