Independent Ireland leader Michael Collins has slammed the Government’s “abject failure” as new research reveals Irish homes are approximately 17% overvalued.
New research from the Economic and Social Research Institute (ESRI) has found that Irish house prices are currently around 17% above the level justified by factors such as incomes, interest rates and demographics, prompting fresh criticism of Government housing policy.
The ESRI’s analysis, released this week, concluded there is a “significant degree” of overvaluation in the residential property market. That figure has climbed sharply since the Institute’s last comparable assessment, which put overvaluation at between 8 and 10% in 2024, representing a near two-fold increase since that time.
Report co-author Dr Paul Egan said the findings show Irish house prices are “significantly above what economic fundamentals would suggest, driven by prices rising faster than incomes and higher mortgage rates, with middle-income households bearing the greatest burden.”
The ESRI distinguished the current situation from the property bubble that preceded the 2008 financial crash, when overvaluation peaked at more than 40%. Unlike that period, which researchers say was fuelled by “excessive credit growth and loose lending standards”, the ESRI describe today’s imbalance as “primarily an affordability issue,” rooted in a persistent shortage of homes being built rather than reckless lending.
Speaking on RTÉ’s Morning Ireland, Dr Egan said, “It’s structurally very different to the 2007-2008 period, which was mainly driven by credit expansion and loose … standards. We don’t have those conditions present today. What we have today is an affordability problem,” he said.
“So, basically prices are being pushed up by a shortage of homes and rising mortgage costs. So, you basically have an increase in house prices that is going faster than people’s incomes can sustain and maintain. So that’s where you get this wedge between the actual and the implied house price.”
He added: “Across the board, no matter what measure we use, there is definitely an element of overvaluation in there, in that the actual house prices are definitely above what the fundamentals say that prices should be.”
Michael Collins TD said it “further underlines the Government’s abject failure to deliver homes that working and middle-income families can actually afford.”
“The so-called ‘squeezed middle’ is no longer squeezed — it is choked,” Collins said, arguing that families who are “working, paying their taxes and doing everything expected of them” are nonetheless being priced out of home ownership.
Collins pointed to the median price of a home purchased in the year to May -€395,000 – as evidence that prices have moved out of reach for many ordinary earners, and accused the Government of relying on “carefully massaged housing figures” rather than addressing the underlying shortage.
“Government must remove the barriers that are holding back construction, accelerate the delivery of genuinely affordable homes and ensure that housing policy is focused on the people who actually need to buy a home — not simply on producing headline figures,” he said, calling the situation “a national emergency in housing affordability.”
“This is not an abstract economic problem. It is a family problem, a generational problem and increasingly a national emergency,” he said.
“The Government needs to stop congratulating itself on targets and start delivering results for the people who are paying the price for its failure,” he said.