Irish House Prices Overvalued by 17% Due to Supply Deficit, ESRI Reports
Friday 4 September 2026
A new Economic and Social Research Institute (ESRI) report reveals that Irish residential property prices are significantly overvalued due to structural supply shortages.
Irish house prices were approximately 17% overvalued in the third quarter of last year due to supply shortages, according to the ESRI.
A new report by the Economic and Social Research Institute (ESRI) highlights a "significant degree of overvaluation" in the Irish residential property market, which is primarily driven by affordability issues.
This current trend contrasts with the property peak at the end of 2006, when prices were estimated to be 45% higher than economic fundamentals justified. The ESRI states that the modern overvaluation is "structurally different in nature" because it is driven by supply imbalances rather than high levels of borrowing. Because the demand for housing outpaces the rate of new construction, prices have grown significantly faster than household incomes.
According to Dr Paul Egan of the ESRI, middle-income households are facing the greatest burden. This is because incomes have not kept pace with the rapid rate of increase in house prices, leaving properties priced significantly above what general economic fundamentals, including mortgage rates, would suggest.