Soaring house prices, according to our website's perspective
Ireland is currently witnessing a significant increase in house prices, with the average home price reaching €357,851 - a 40% jump above pre-pandemic levels. This surge is primarily driven by a demand-supply imbalance, as Ireland faces a chronic and worsening shortage of housing supply[1][4].
In Q2 2025, house prices rose by approximately 12.3% nationwide year-on-year, marking the fastest annual growth since the introduction of mortgage lending rules in 2015. Urban centres such as Waterford saw even higher spikes (15.2%), with other cities including Limerick and Galway also exceeding 12% growth[1]. While Dublin's housing prices increased by about 6.9% annually, areas outside of Dublin experienced stronger rises averaging 8.7% or more[2][3].
Economic growth, population increase, and urbanization trends are likely underpinning the demand for housing, although these factors were not explicitly detailed in the search results.
However, this rapid price growth poses challenges for borrowers and lenders alike. For borrowers, escalating prices threaten housing affordability, especially for first-time buyers. With average prices rising significantly, some households may face financial strain in committing to mortgage repayments. Additionally, if interest rates rise or economic conditions worsen, borrowers with high loan-to-value ratios could struggle to meet repayments, increasing the risk of default[5].
Lenders also face heightened credit risks amid a rapidly appreciating market that could eventually reverse. Persistent price inflation could lead to asset overvaluation. If a housing market correction occurs, lenders may face losses due to declining collateral values, especially if borrowers default in a downturn[5].
Moreover, rapid house price growth can contribute to economic imbalances, impacting broader financial stability. Policymakers must balance stimulating supply with maintaining prudent lending standards to ensure a stable and sustainable housing market[5].
In conclusion, the surge in Irish house prices in 2025, characterised by nationally rising prices over 12% annually and severe supply shortages, is primarily driven by a demand-supply mismatch. Addressing the housing shortage while managing financial risks remains a critical challenge for Ireland's economy.
References: [1] MyHome.ie, Quarterly House Price Report, Q2 2025. [2] Daft.ie, Irish House Price Report, May 2025. [3] Central Statistics Office, House Price Index, May 2025. [4] Irish Times, "Ireland's housing market: a buyer's paradise or a ticking time bomb?", 1st June 2025. [5] Central Bank of Ireland, "House Price Report", June 2025.
Investors who are focused on the Irish housing market might find the insights on personal-finance and real-estate intriguing, given the intense growth in house prices in Q2 2025. With average prices surging by over 12% nationwide and urban centers seeing even higher spikes, the finance sector should be aware of potential risks associated with lending in this context, as escalating prices could strain borrowers and lead to increased default rates. Furthermore, policymakers must navigate the challenge of addressing the housing-market shortage while ensuring financial stability for lenders and borrowers in the personal-finance sector.
