ESRI Finds Irish Property Prices 17% Overvalued

The Economic and Social Research Institute found that Irish property prices are 17% overvalued relative to economic fundamentals, including demographics, interest rates, and incomes. This figure marks an increase since December 2024, though it remains significantly lower than the 45% overvaluation seen at the 2006 peak.

Researchers noted that the current trend is structurally different from the 2008 financial crisis. While the previous bubble was fueled by loose lending standards and excessive credit growth, the current situation stems from structural imbalances in housing supply and affordability. Paul Egan of the ESRI stated that middle-income households are bearing the greatest burden because house prices are rising faster than incomes.

In a separate report, the Central Bank of Ireland noted that household net worth reached a record €727 billion last year, surpassing the peak seen in 2007. Property price inflation has been the primary driver of this growth, accounting for two-thirds of the increase in net worth since 2012.