The ESRI predicts that workers’ incomes will rise both this year and next. This encouraging trend is attributed to several factors, including economic expansion and improved labour market conditions. ESRI is forecasting that on average earnings should rise by more than 4% this year and closer to 5% next year. However, this will be offset by inflation which will drop this year to 2.3%, before decreasing further to 1.9% in 2025.

While the pandemic posed challenges, Ireland’s recovery has been robust, leading to increased business activity and job creation. The Irish economy is set to expand steadily. Despite global uncertainties, domestic demand remains strong, supported by consumer spending and investment. Sectors such as technology, pharmaceuticals, and financial services continue to thrive, contributing to overall growth.

Households are expected to benefit from higher real wages. As inflation persists, wage growth becomes crucial in maintaining purchasing power. Employers are increasingly recognizing the need to attract and retain talent by offering competitive salaries. This trend is particularly pronounced in skilled professions.

While wage growth is positive, inflation remains a concern. Rising prices for goods and services can erode the gains from higher incomes. The Central Bank of Ireland is closely monitoring inflation dynamics and adjusting monetary policy accordingly.

The projected rise in workers’ incomes is a welcome development for families across Ireland. As the economy rebounds, individuals can expect better financial stability and improved standards of living.

Regional Variations:
Price increases vary by region. In Dublin, prices are up 4.7% year-on-year, with the average home costing €453,671. In Cork and Waterford cities, the increase is around 10%, with average prices at €363,845 and €258,199 respectively. Limerick and Galway cities have seen the highest increases, with prices more than 12% higher than last year. The average price in Limerick is now €292,253, and in Galway, it is €402,885.
In Leinster (excluding Dublin), prices have climbed 6.1% over the year, while in Munster, the increase is 10.4%, and in Connacht-Ulster, it is 6.2%.

Factors Influencing Prices:
Economist Ronan Lyons from Trinity College Dublin noted that the tight availability of homes, combined with recent interest rate increases, is contributing to the rising prices. Many homeowners are staying in their homes longer due to fixed-rate mortgages at lower interest rates, which limits the number of homes available for sale. Lyons expects that as interest rates come down and more homeowners come off fixed-rate mortgages, the supply of homes should improve, but this will take time.

Future Outlook:
The report suggests that the tight conditions in the housing market may continue for some time. The availability of second-hand homes has been consistently low since the start of the year, leading to the largest three-month increase in prices since 2020. As interest rates decrease and more homes become available, the market may see some relief, but this process is expected to be gradual.