Irish Property Market Moderates to 3-5% Growth Forecast as Supply Gap Persists Through 2026
Ireland's residential property market is expected to see price growth moderate to between 3 and 5 per cent in 2026, a significant slowdown from the double-digit increases of recent years, but the fundamental supply-demand imbalance that has driven the housing crisis shows no sign of resolving — with completions forecast at around 35,000 homes against an estimated annual demand of 44,000 to 50,000 units, a gap that will keep affordability under pressure for buyers and renters alike.
Background
Ireland's housing crisis has been one of the defining political and economic issues of the past decade. The combination of rapid population growth, strong employment, limited housing supply and a construction sector that has struggled to scale up quickly enough has produced a market in which prices and rents have risen far faster than incomes, making homeownership increasingly unattainable for many Irish people and pushing rents to levels that are among the highest in Europe.
The government has introduced a range of measures designed to address the crisis, including the Help to Buy scheme, the First Home shared equity scheme, planning reforms and increased investment in social and affordable housing. However, the impact of these measures has been limited by the fundamental constraint of supply: until more homes are built, the pressure on prices and rents will persist regardless of the demand-side interventions that are put in place.
The moderation in price growth forecast for 2026 reflects a combination of factors: higher mortgage interest rates that have reduced the purchasing power of buyers, a slight improvement in supply as some of the projects that were delayed during the pandemic and the post-pandemic construction cost surge begin to complete, and a degree of affordability exhaustion as prices have reached levels that are simply beyond the reach of many potential buyers.
Key Developments
The forecast of 3 to 5 per cent price growth in 2026 represents a significant moderation from the 8 to 10 per cent increases seen in 2024 and 2025, but it still means that prices are rising faster than incomes in most parts of the country. The average house price in Dublin is now well above €500,000, and prices in Cork, Galway and Limerick have also risen sharply in recent years.
The supply picture remains deeply challenging. Approximately 35,000 homes are expected to be completed in 2026, against an estimated annual demand of 44,000 to 50,000 units. The gap between supply and demand has been a persistent feature of the Irish housing market for years, and there is little prospect of it closing significantly in the near term. High construction costs, elevated interest rates and planning delays continue to act as barriers to the delivery of new homes at the scale required.
One notable trend in the market is the premium being commanded by energy-efficient homes. Properties with high Building Energy Rating (BER) certificates — typically A or B ratings — are achieving prices 10 to 15 per cent above comparable properties with lower ratings, reflecting both the financial savings associated with lower energy bills and the growing awareness among buyers of the importance of energy efficiency in the context of rising energy costs and climate change.
Why It Matters
The housing market's performance matters because it affects the lives of virtually every person in Ireland, whether they are trying to buy a home, renting in the private sector, on a social housing waiting list or simply watching the value of their existing home change. The affordability crisis has had profound social consequences, contributing to delayed family formation, increased commuting distances, and a growing sense among younger Irish people that homeownership is an aspiration rather than an expectation.
The housing crisis also has economic consequences. High housing costs reduce the disposable income available for other spending, act as a barrier to labour mobility and make it more difficult for employers to attract and retain workers in high-cost urban areas. Several major employers have cited housing costs as a factor in their decisions about where to locate or expand their operations in Ireland.
The moderation in price growth, while welcome, does not represent a solution to the housing crisis. Prices that are rising at 3 to 5 per cent a year are still rising faster than wages in most sectors, meaning that affordability is continuing to deteriorate even as the rate of deterioration slows. A genuine resolution of the housing crisis requires a sustained increase in supply to levels that significantly exceed current demand — a target that remains elusive.
Local Impact
In Dublin, the affordability crisis is most acute in the city centre and the inner suburbs, where prices have risen to levels that are beyond the reach of most first-time buyers without significant family support. Areas such as Ranelagh, Rathmines, Clontarf and Blackrock have seen particularly sharp price increases, and the displacement of lower-income residents from these areas has contributed to the social and demographic transformation of Dublin's inner city.
In Cork, Galway and Limerick, the housing market has followed a similar trajectory to Dublin, with prices rising sharply in recent years and affordability becoming an increasingly serious issue. The expansion of remote working has also affected the market in these cities, with increased demand from Dublin-based workers who are able to work remotely and are seeking more affordable housing in other parts of the country.
What's Next
The government's Housing for All plan is due for its annual review in the autumn, which will provide an opportunity to assess progress against the plan's targets and to consider whether additional measures are needed. The review is expected to focus particularly on the supply side of the market, with a range of measures under consideration to accelerate the delivery of new homes. The Central Bank's mortgage lending rules are also under review, with a decision on any changes expected before the end of the year.
