Irish housing market trends

Decoding the Irish Housing Market: Are We Headed for Another Boom?

Lena Kashyap in Business & Economy August 2025 • 3 min read.

"A deep dive into the fundamentals, imbalances, and future trends shaping property prices in Ireland."

The Irish housing market has been a rollercoaster over the past few decades, experiencing one of the most pronounced boom-bust cycles among OECD countries. Understanding the forces at play is crucial for anyone looking to buy, sell, or invest in Irish property. But what exactly drives these dramatic shifts? Are they based on solid economic fundamentals, or are imbalances and speculative bubbles to blame?

This article delves into an in-depth econometric analysis of the Irish housing market, drawing insights from a research paper that examines the period from 1975 to 2013. We'll break down the complex models and data to reveal the key drivers behind house price movements, distinguishing between fundamental factors and market imbalances.

Whether you're a first-time homebuyer, a seasoned investor, or simply curious about the Irish economy, this analysis will provide you with a clearer picture of the forces shaping the housing market and the potential for future growth.

What Really Drives Irish House Prices? Untangling the Web of Factors

The research identifies a range of factors influencing Irish house prices, separating them into fundamental drivers and elements that contribute to market imbalances. Here's a closer look at what they found:

During the Boom (Pre-2007):

Rising Disposable Income: As the Irish economy boomed, people had more money to spend, fueling demand for housing.
Demographic Factors: A growing population, particularly among young adults, increased the need for housing.
Lower Mortgage Interest Rates: Cheaper borrowing costs made it easier for people to afford homes.
Increased Mortgage Lending: Banks were more willing to lend, further stimulating demand and pushing up prices.

During the Bust (Post-2007):

Looking Ahead: What Does the Future Hold for Irish House Prices?

The analysis suggests that Irish house prices may experience moderate recovery if fundamental drivers continue to improve as projected. Keep a close eye on disposable income, population trends, and mortgage lending practices to gauge the direction of the market. While the future is never certain, understanding these key factors will empower you to make informed decisions about your involvement in the Irish housing market.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.2139/ssrn.2463784, Alternate LINK

Title: Imbalances Versus Fundamentals -- An Econometric Analysis Of House Prices In Ireland

Journal: SSRN Electronic Journal

Publisher: Elsevier BV

Authors: Sven Langedijk, Balint Tatar

Published: 2014-01-01

Everything You Need To Know

What were the primary factors that fueled the Irish housing market boom leading up to 2007?

The boom period before 2007 saw a surge in house prices in Ireland, driven by several key factors. Rising disposable income meant people had more money to spend on housing. Demographic factors, such as a growing population, especially among young adults, increased the demand for homes. Lower mortgage interest rates made it easier for people to afford properties. Furthermore, increased mortgage lending by banks stimulated demand and further inflated prices. It is important to note that these factors do not operate in isolation; they often reinforce each other, creating a powerful upward spiral in house prices.

Based on the analysis, what is the outlook for Irish house prices in the future, and what key factors should be monitored?

The analysis suggests that a moderate recovery in Irish house prices is possible, contingent on the continued improvement of fundamental drivers. This means that disposable income needs to keep increasing, population trends should remain positive, and mortgage lending practices must be managed prudently. However, predicting the future is inherently uncertain, and unforeseen events can always disrupt market trends. Monitoring these key factors closely is essential for making informed decisions about participating in the Irish housing market.

In the context of Irish house prices, what's the difference between 'fundamental drivers' and 'market imbalances,' and why is this distinction important?

The research identified a distinction between fundamental drivers and elements contributing to market imbalances. Fundamental drivers include factors like disposable income and demographic trends, which reflect the underlying economic health and population growth. Market imbalances, on the other hand, refer to situations where supply and demand are significantly out of sync, often fueled by speculative behavior or unsustainable lending practices. Understanding this distinction is crucial for assessing the true value of properties and avoiding investment decisions based on artificially inflated prices.

The research examines the Irish housing market from 1975 to 2013; how relevant are these findings today, considering market changes since then?

The research covers the period from 1975 to 2013. While this provides a valuable historical perspective, it's important to acknowledge that the Irish housing market has continued to evolve since 2013. Factors such as changes in government policies, technological advancements, and global economic events can all influence house prices. Therefore, while the insights from this analysis are helpful, they should be considered in conjunction with more recent data and analysis to gain a comprehensive understanding of the current market dynamics. For example, this analysis does not include the impact of remote work and increased demand for rural housing.

How do mortgage lending practices influence the dynamics of the Irish housing market, and what constitutes responsible lending in this context?

Mortgage lending practices play a crucial role in shaping the Irish housing market. During the boom, increased mortgage lending fueled demand and contributed to rising prices. Conversely, stricter lending criteria implemented after the bust helped to cool down the market. Responsible lending practices are essential for preventing future bubbles and ensuring the stability of the housing market. This includes factors such as loan-to-value ratios, debt-to-income ratios, and stress testing borrowers' ability to repay their mortgages under different economic scenarios. The availability and affordability of mortgages significantly impact who can participate in the housing market and how much they can afford to borrow.