Ireland House Prices 17% Overvalued, ESRI Finds
The ESRI estimates Irish property is 17% overvalued. Median prices hit €399,000 in July, requiring high incomes to finance.
Key points
- The ESRI estimates Irish property is 17 per cent overvalued, with median prices at €399,000 in July.
- Buyers require an income of €89,750 to finance the median home, rising to €154,000 in Dún Laoghaire Rathdown.
- Household debt to income is 83 per cent in 2025, significantly lower than the 2006 peak of over 200 per cent.
Irish residential property is overvalued by 17 per cent, the ESRI reported this week. This estimate reflects prices rising faster than incomes, supply, and interest rates.
The median national house price reached €399,000 in July. This figure is 28 per cent above the 2007 peak, despite the financial crisis. The market remains detached from economic fundamentals.
Affordability strains buyer capacity
Buyers need €89,750 annual income to afford the median home. In Dún Laoghaire Rathdown, this requirement jumps to €154,000. Central Bank rules mandate a four-times income multiple for mortgages.
House prices doubled between 2015 and 2025, a 103 per cent increase. This growth rate is among the highest in the EU. The median price was €260,000 in May 2020.
Current risk differs from 2008
The 2006 overvaluation peak exceeded 40 per cent, leading to a crash. Today’s 17 per cent gap is structurally distinct from that period. Household debt to income stands at 83 per cent in 2025.
Debt to income was over 200 per cent in the Celtic Tiger era. The financial system is stronger now with lower household leverage. However, the price-to-income ratio has risen to 129 per cent.
European peers face similar risks
The European Commission flagged overvaluation in several EU nations. Portugal leads with a 25 per cent overvaluation in late 2025. Greece, Sweden, and the Netherlands follow with 23, 20, and 18 per cent.
The Irish Times reported on these figures as part of a broader analysis. The ESRI notes inherent uncertainty in estimating these valuations. The data suggests a risk of price corrections across the region.
