Signs of potential improvement emerge in ireland’s housing market

New construction is showing signs of progress. Between July and September of this year, the number of new homes completed rose by 10.4% compared to the previous year. Approximately 27,000 dwellings have been finished so far in 2026, with projections estimating between 39,000 and 40,000 completions by year-end, a significant increase from the 36,000 built in 2025. Despite this, the output remains below the 50,000 to 60,000 units needed to address the estimated pent-up demand of 250,000 to 300,000 homes. The government has shifted away from annual building targets, aiming instead for 300,000 homes built between 2025 and 2030, necessitating a substantial increase in construction output.

Mortgage lending is also experiencing a positive trend. The number of first-time buyer mortgages has increased by 9% year-on-year, with 22,600 loans issued thus far this year. There’s also a 7% annual rise in mortgages for existing homeowners moving to new properties, indicating greater liquidity in the market.

The availability of older homes for sale is also improving. In September, 14,600 properties were listed on MyHome, a 12.5% increase compared to last year. This represents a shift from the previous contraction in listings, which was driven by sellers’ concerns about finding alternative housing.

The rate of property price growth is decelerating. While prices were rising by 10% annually two years ago, that figure has now slowed to 5%, with economists predicting a further decrease to 3% or 4%. A significant drop in prices is not anticipated due to sustained demand and Central Bank lending regulations. Higher interest rates, including a recent increase by the European Central Bank from 2% to 2.5% with another rise expected in December, are contributing to this cooling effect, pushing affordability to its limits for many buyers.

Government policy changes are intended to stimulate investment, including adjustments to building standards, reduced VAT on new apartments, and relaxed rent controls. These measures have been met with criticism from opposition parties, who highlight the impact on tenants. The changes have been welcomed by the construction industry, although significant work remains to increase housing output beyond the critical 50,000 threshold. Economic headwinds, such as inflation, rising interest rates, and geopolitical uncertainty, pose a risk to progress by potentially deterring investors. Dermot O’Leary, chief economist at Goodbody Stockbrokers and former member of the State’s Housing Commission, emphasizes the need for continued government support for social housing and homeownership, faster rezoning of residential land, a coordinated approach to utility provision, and further planning system reforms.