Summary of Findings
A new MyHome.ie report (October 2025) has revealed that average Irish house prices are now 8 times higher than the average annual salary.
- The average home price is now €426,000.
- The average annual income is approximately €53,000.
- The gap between wages and home prices is wider than at any point since 2007, when the market reached its pre-crash peak.
According to the report, inflation is also at the lowest it has been in two years. This does not mean, however, that house prices have stopped going up. It only means that they are going up at a slower rate than previous quarters.
To read the detailed report – download it HERE.
Why is House Price Inflation Slowing Down?
According to the report,
- AFFORDABILITY IS STRETCHED.
As indicated above, this is because the average residential property sold in 2025 had a price of €426,000 – eight times the average earnings of €53,000. This also means house price-to-earnings are now at their most expensive level since 2007.
2. MORE FIRST-TIME BUYERS TOOK A MORTGAGE FROM JAN 2023.
This is because the Central Bank relaxed mortgage lending, which allowed homeowners to borrow up to four times their income. Before that, the limit was 3.5 times your income.
As a result, first-time-buyers have taken 27,000 mortgages over the past 12 months alone – the highest level since 2007. That process has now largely played out now.
30 Years of House Price-to-Income Estimates in Ireland (1995–2025)
| Year | Avg House Price (€)*** | Avg Annual Income (€) | Price-to-Income Ratio |
|---|---|---|---|
| 1995 | €78,000 | €20,000 | 3.9× |
| 2000 | €180,000 | €27,300 | 6.7× |
| 2005 | €270,000 | €37,000 | 7.2× |
| 2007 | €350,000 | €40,600 | 8.7× |
| 2009 | €213,000 | €43,450 | 5.1× |
| 2015 | €215,000 | €42,900 | 5.1× |
| 2020 | €305,000 | €49,100 | 6.2× |
| 2021 | €330,000 | €50,500 | 6.6× |
| 2022 | €360,000 | €52,000 | 7× |
| 2023 | €395,000 | €53,955 | 7.5× |
| 2024 | €410,000 | €55,590 | 7.5× |
| 2025 | €426,000 | €53,000 | 8.0× |
*** Please be used Median prices in some years based on what I could find.
Sources:
- Statista
- MyHome.ie Property Price Report Q3 2025
- Central Statistics Office (CSO) Average Earnings Series
- Bank of Ireland Economic Pulse – Various Documents
- Various average Figures from Google Searches
How Did We Get Here?
1. Wage Growth Can’t Catch Up
While average wages have grown roughly 165% since 1995, average house prices have soared by over 445%. Even after the post-2008 correction, prices continued rising from 2013 onwards, driven by:
- Supply shortages (especially urban apartments).
- Rising construction and land costs.
- Increasing population, demand from investors and returning emigrants.
Just to name a few.
2. The Illusion of “High Incomes”
Ireland’s rising salaries, especially in tech and pharma, are skewing averages. Median household income remains much lower than the reported average (around €46,000–€48,000). This means that even more households are priced away from ownership than the averages suggest.
The result – a shrinking middle class of homeowners, and a growing proportion of renters locked out of the market indefinitely.
3. Central Bank Rules Are Still a Barrier
Despite recent tweaks to mortgage lending limits (allowing first-time buyers to borrow up to 4× income), home affordability still has not improved.
With homes at 8× annual income, even well-paid buyers are stretching their borrowing capacity to the limit. Or simply rely on the bank of ma and da.
In short – credit flexibility (the ability to borrow) has increased, but actual affordability has not.
Short-Term Implications (2025–2026).
1. Price Stabilisation, Not Reduction
Budget 2026’s policies, which include a VAT cut on apartments from 13.5% to 9%, will make new urban apartments more attractive to build.
However, these benefits will take 12–24 months to materialise.
- We can expect prices to stabilise instead of dropping in 2026.
- Rural and commuter-belt homes may still increase due to limited supply and ongoing trends in remote working
2. Possible Rent Increase in 2026?
Younger adults are likely to remain renters for longer. It looks like mortgage approvals are starting to plateau, and deposit requirements are higher than ever.
This trend could further increase the demand for rentals, and possibly push rents higher again through 2026.
3. Buyers Will Continue to Pay More for Less.
The Government’s new VAT reduction may help developers, but labour and material costs remain high. Developers may only focus on apartment projects that promise a high profit. In case you forgot, the government reduced minimum apartment standards in July 2025 from 37 sq.m. to 32 sq. m.
This could mean even more ‘luxury apartments‘ would be built instead of affordable ones.
4. Generational Divide Deepens
Homeownership among under-35s in Ireland is significantly lower than in the past. Home ownership for 25-34 year olds fell from 68% in 1991 to 27% in 2019. I can only imagine what the figures are today.
As prices remain disconnected from wages, wealth inequality between older and younger Irish adults will continue to widen.
Despite all the above, Ireland is not currently in a “bubble” in the 2007 sense. Mortgage lending is way more disciplined; but damn, the affordability crisis is just as severe, and arguably more socially damaging.
Conclusion – When 8× Income Becomes the New Normal
Most developed economies (Germany, France, Netherlands) have managed to maintain price-to-income ratios between 4× and 6×. Ireland as a whole, now sits closer to London’s 9×–10× range, despite having a smaller, lower-wage population.
That is crazy.
In my opinion, this imbalance strongly suggests that the Irish housing market has detached itself from economic fundamentals. Ireland’s house prices no longer make sense when compared to average wages, building costs, or people’s ability to pay.
In a healthy market, we usually expect house prices to rise with:
- people’s income levels,
- the cost to build a home, and
- general inflation.
But in a strange way, Ireland’s house prices continue to rise much faster than all the above. Even though wages and construction costs have gone up, 8 times the average salary is just plain ridiculous.
Instead of being driven by what most people can realistically afford, the housing market continues to be driven by scarcity. That shortage allows sellers and developers to keep prices high, even when the average buyer’s income clearly doesn’t support it.
In short – Irish homes cost what the market can get away with; not what people can afford.
Budget 2026’s tax incentives may help unlock more needed housing (I’m not even sure anymore), but they won’t fix affordability. Unless Ireland somehow magically improves it’s planning system and boosts supply faster than wage growth (14 Billion Apple Tax windfall ANYONE???), the next generation will be left competing for homes they can’t afford to buy, and can barely afford to rent.
The Celtic Tiger is long gone, but its housing legacy is still alive and well.
