The median asking price for a home in Ireland now stands at €365,000, reflecting a 0.8% increase from the previous quarter. The rise in prices is more pronounced outside the capital, where prices have surged by 8.5% over the year, bringing the median asking price to €315,000. In Dublin, the annual increase was 6.2%, with the median price reaching €455,000.

Several factors contribute to this upward trend. One significant driver is the limited supply of homes. As of September, there were 13,100 homes listed on MyHome.ie, a figure significantly lower than pre-pandemic levels. This shortage is exacerbated by the reluctance of potential sellers who fear they might not secure a new property after selling their current one.

Economic factors also play a role. The relaxation of Central Bank mortgage lending rules for first-time buyers has increased the share of first-time buyers with higher loan-to-income ratios. Additionally, average earnings have risen, which has helped drive up mortgage approval values.

In Waterford, house prices have seen a substantial increase. In Waterford City, prices in the third quarter of 2024 were 3% higher than a year previously, with the average price of a home now at €250,000. In the rest of Waterford, prices rose by 8% over the same period, with the average price reaching €348,000.

The overall housing market in Ireland remains under pressure due to the country’s population growth, which has been 1.9% for the second consecutive year. To match the UK’s housing-to-population ratio, Ireland would need to build an additional 206,000 homes.

Despite the challenges, there are some positive signs. New housing starts have risen to 49,000 in the year to July, and MyHome.ie expects completions to increase sharply next year to above 40,000 units. However, the impact of build cost inflation and elevated energy costs remains a concern.

In addition to these factors, the report highlights that one in seven properties are now selling for 20% over the asking price, indicating a highly competitive market. This trend is particularly evident in Dublin, where the demand for housing continues to outstrip supply.

The report also notes that the average time to sale agreed was just 12 weeks in the third quarter, close to a historic low. This rapid turnover is a clear sign of the high demand and limited supply in the market.

Conall MacCoille, Chief Economist at Bank of Ireland, commented on the situation, stating that the rising population and economic growth are reminiscent of the Celtic Tiger era. He emphasised the need for a significant increase in housing supply to meet the growing demand.

Joanne Geary, Managing Director of MyHome.ie, expressed optimism about the future, noting that the increase in housing starts and expected completions are positive signs. However, she also stressed the importance of sustained efforts to address the imbalance in the market.

The Irish housing market is experiencing significant price increases driven by limited supply, economic factors, and population growth. While there are efforts to increase housing supply, the market remains tight, and prices are expected to continue rising in the near term.

The review, conducted by the Department of Housing, Local Government and Heritage, highlights the significant challenges faced by the private rental sector. Rising construction costs, high interest rates, and increasing material prices have made it difficult for developers to build new rental properties. As a result, the supply of rental homes has not kept pace with demand, leading to higher rents and a shortage of affordable housing.

One of the key recommendations from the review is to provide financial incentives to developers. These incentives could include subsidies, tax breaks, or grants to offset the high costs of construction and make it more viable for developers to invest in rental properties. The goal is to bridge the gap between the high costs of building and the lower sale prices that make rental projects less attractive to developers.

The review also emphasizes the need for a comprehensive approach to reforming the private rental sector. This includes enhancing regulations to protect tenants, ensuring that rental properties are safe and secure, and creating a more stable and predictable rental market. The government aims to create a framework that benefits both landlords and tenants, making the rental market more efficient and sustainable.

Public consultation has been a central element of this review. The Department of Housing has encouraged the public to share their views and experiences with the private rental sector. This input is crucial for shaping policies that address the real needs and challenges faced by renters and landlords alike.

Housing Minister Darragh O’Brien has acknowledged the difficulties in meeting housing targets and the need for innovative solutions. He has faced criticism for over-promising and under-delivering on housing schemes, but he remains committed to finding effective ways to increase the supply of affordable housing. The Croí Cónaithe Cities Scheme, for example, aimed to deliver 5,000 apartments in cities but has struggled to attract developers, with only a fraction of the target achieved so far.

The review’s findings underscore the importance of government intervention in the housing market. By providing incentives and creating a supportive regulatory environment, the state can encourage more investment in rental properties and help alleviate the housing crisis. The ultimate goal is to ensure that everyone has access to safe, affordable, and secure housing, whether they are renting or buying.

The government’s review of the private rental sector highlights the need for financial incentives for developers, enhanced regulations to protect tenants, and a comprehensive approach to reforming the rental market. Public input will play a crucial role in shaping these policies, with the aim of creating a more efficient, affordable, and sustainable housing system for all.