House prices now eight times average earnings as affordability hits 16-year low
Michael McAleer
The average residential property sold in 2025 had a price of €426,000, eight times’ average earnings of €53,000. By this metric Irish house price-to-earnings are now at their most expensive level since 2009.
According to the latest quarterly house price report from MyHome, housing completions rose to 32,700 in the 12 months to June, the highest level since the Celtic Tiger era. Meanwhile, average rents still imply yields of circa 5 per cent, well above current retail mortgage interest rates of 3-4 per cent.
Annual asking price inflation has softened to its lowest rate in almost two years, according to the latest quarterly house price report from MyHome in association with Bank of Ireland.
The MyHome report for Q3 2025 found that annual asking price inflation was 5.7 per cent nationwide. Annual asking price inflation in Dublin is now 4.8 per cent, and the rate is 6.2 per cent in the rest of Ireland.
Meanwhile, asking prices nationally fell slightly by 0.4 per cent on the quarter, were flat in Dublin and fell by 0.4 per cent in the rest of the country.
This means the median asking price for new instructions nationally was €385,000 in Q3. In Dublin, it was €475,000, and in the rest of the country it was €340,000.
The last time asking price inflation was lower than the current rate was during the last three months of 2023. According to MyHome, this softening in inflation has been driven by increasingly stretched affordability and the process of first-time buyers availing of the Central Bank’s increased borrowing limits having largely played out.
According to the report, a chasm now exists between first-time buyers desperate to secure a property and existing homeowners unwilling to move.
First-time buyers have drawn down 27,000 mortgages over the past year – the highest level since 2007. Meanwhile, the 9,200 mover mortgages drawn down over the same period is close to the lowest level in a decade.
The author of the report, Conall MacCoille, chief economist at Bank of Ireland, said: “The MyHome report provides evidence house price inflation is finally slowing down. But the pace of price rises is merely softening. The market is still extremely difficult; there are currently just 13,000 properties listed for sale on MyHome, flat on the year and still down from the levels exceeding 20,000 seen prior to the Covid-19 pandemic.”
Mr MacCoille said that even though affordability was becoming more stretched, competition in the market was still fierce.
He said that despite the difficult market, home completions represented a silver lining. “Misleading reports that homebuilding was likely to contract in 2025 have proven well wide of the mark.”
Mr MacCoille said it was likely that the sharp pace at which first-time buyers have taken on higher levels of mortgage debt would slow next year and added that it wasn’t too surprising to see the Irish housing market “pause for breath”.
“Two years of ‘high-single-digit’ price gains have stretched affordability. House prices are now likely to rise closer to the current pace of average earnings growth at 5 per cent. This certainly isn’t the solution to Ireland’s housing problem. However, at least the deterioration in affordability seems to be levelling off for now.”
Joanne Geary, managing director of MyHome, said: “It is encouraging to observe that home completions have reached their highest level in nearly two decades, suggesting that the Government’s sustained emphasis on supply is yielding positive outcomes. It was also noteworthy to see Budget 2026 introducing measures that will help to boost supply, including a cut in the rate of VAT on completed apartments from 13.5 per cent to 9 per cent.
“Nonetheless, significant improvements in supply are likely to be evident only over the medium to long term, so maintaining momentum remains critical. The Government should continue to seek and implement effective measures to further encourage homebuilding activity.”
