Irish Housing Market ‘Vulnerable’ To Sudden Economic Shock

08/04/2025

Est. Reading: 4 minutes

Housing - Hands - Keys

The Irish property market’s disproportionate reliance on high income earners working in multinational sectors would see it vulnerable to any sudden economic shock, according to the latest quarterly house price report from MyHome in association with Bank of Ireland.

The threat of a trade war will influence how the housing market will perform this year. However, the housing market’s record low supply levels and continued strong demand means that our forecast of 5% inflation for 2025 may prove too conservative if a trade war does not materialise.

The MyHome report for Q1 2025 found that annual asking price inflation was 8.1% nationwide. Annual asking price inflation in Dublin is now 6.2% and the rate is 9.2% in the rest of Ireland.

Meanwhile, the report found asking prices nationally rose by 1.7% on the quarter, by 2.6% in Dublin and by 1.1% in the rest of the country.

This means the median asking price for new instructions nationally in the quarter was €375,000. In Dublin it was €450,000 and in the rest of the country it was €315,000.

Main Findings

Property market’s reliance on higher earners could see negative impact in case of EU-US trade war
National asking prices up 8.1% over the year, with annual asking prices outside Dublin rising by over 9%
The average mortgage loan for house purchase is now almost €320,000 – up 7% on the year
First-time buyer mortgage drawdowns rose to 26,200 in 2024, their highest level since 2007, but mover drawdowns fell to just 9,000 loans, now 20% below pre-Covid-19 levels
Just 10,800 homes available for sale on MyHome in March 2025 – a fresh record low, while average time to sale agreed is down to 11 weeks
If economic trade war does not occur, forecast for 5% inflation in 2025 could prove too conservative

Other findings include:

The average mortgage approval was €318,400 in January – up 7% on the year and pointing to further price gains.
Irish house prices are now 8 times’ average incomes of €51,000, their most stretched level since 2009.
The average time to sale agreed was just 11 weeks in Q1, close to a historic low.
15,900 apartments, equivalent to at least two years’ supply, were under construction as of September 2024 – indicating a pick-up in completions.
Completions of scheme houses rose to 16,200 in 2024, or including one-off houses to 21,600. In both cases these are the highest levels attained since the Celtic Tiger era.
We estimate residential transaction volumes in Q1 2025 were up 6% on the year, while new listings for sale in the six weeks to March 16th were 4,800 – stronger than in both 2024 and 2023.
Rental yields are exceeding 4.5% in all but two counties nationwide.

The author of the report, Conall MacCoille, Chief Economist at Bank of Ireland, said: “Record low supply and continued surging demand are still driving the property market, but risk here is that Ireland’s relatively thin, illiquid housing market, reliant on those at the top of the income distribution could be exposed to a sudden negative economic shock, such as the risk of a US-EU tariff war, especially if it were to disproportionately hit employment in the high-paid multinational sector.”

He said, however, that in the absence of a trade war, all signs point to further growth, and in that instance our forecast of 5% inflation for 2025 may even prove to be conservative. “The average mortgage approval was €318,400 in January, up 7% on 2024 – pointing to further price gains, while the extent of the tightening housing market is still striking. At end-March, just 10,800 homes were listed for sale on MyHome, a fresh record low. Just one in every two hundred homes in Ireland is currently listed for sale.

“Notably, first-time-buyer mortgage drawdowns rose to 26,200 in 2024, their highest level since 2007 but mover drawdowns fell to just 9,000 loans, now 20% below pre-Covid-19 levels.”

Meanwhile, Mr MacCoille warned of increasingly stretched affordability in the market. “Through 2024 Ireland’s residential property price index rose by 8.7%, stretching affordability versus the 5.6% pay growth recorded over the same period. The average Irish residential property transaction of €404,000 was an eight-times multiple of average annual earnings of €51,000. This is the most stretched Irish house prices have become relative to income since 2009.”

Turning to supply, he said the picture couldn’t be more opaque. “The 67,000 housing starts recorded in 2024 clearly didn’t reflect underlying activity levels, but rather developers rushing to avail of waivers on local authority and water infrastructure charges. That said, it is worth remembering that completions of scheme houses rose to 16,200 in 2024, or including one-off houses, to 21,600. In both cases these are the highest levels attained since the Celtic Tiger era.

“The disappointing 30,000 completion figure for 2024 reflected the 8,763 apartment completions, down 24% on the year. However, 15,900 apartments, equivalent to at least two years’ supply, were still under construction as of September 2024. In summary, we would still expect some pick-up in housing completions in 2025.”

Joanne Geary, Managing Director of MyHome, said: “As the threat of a trade war with the US looms, our reliance on certain sectors of the economy will come into sharp focus. The housing market is vulnerable to any economic headwinds, so it is imperative that the Government limits the impact if at all possible while also continuing to ramp up housing supply.”