We are standing at the crossroads. That is the only honest way to describe where Ireland’s property market stands in mid-2026, caught between the immovable forces of scarcity, grinding construction inflation, and an affordability ceiling that is closing in on an entire generation of would-be buyers. Something has to give. The question is what and when.
Galway tells the story better than almost anywhere. Prices in the city and county climbed eight to nine per cent in 2025, driven by its thriving med-tech and life sciences cluster, while demand for quality family homes continues to outstrip supply. House prices nationally rose seven per cent in the 12 months to January 2026, according to the CSO, with the median home now sitting at €390,000.
Affordability is, by some measures, at its worst since 2009. The critical difference today is that the stress is structural, not speculative. It is driven not by reckless lending or developer excess, but by the brutal arithmetic of supply that cannot keep pace with demand. Ireland needs 50,000 to 60,000 new homes a year. This year, completions are forecast at approximately 35,000 units, a meaningful shortfall showing no sign of closing. Planning approvals rose 7.9 per cent year-on-year in 2025, which sounds encouraging, but fewer than 40 per cent of large developments with planning permission have actually started construction.
The bottleneck has shifted downstream. Ireland’s problem is no longer primarily planning refusals. It is projects that are approved but stranded, unable to proceed because the numbers do not stack up once construction costs are factored in. Labour shortages in the trades are persistent and structural. Materials costs remain elevated. The viability gap, the difference between what it costs to build a home and what the market can bear to pay, remains stubbornly wide, particularly for apartments.
Were it not for government interventions such as Help-to-Buy and the First Home Scheme, providing grants of up to €125,000 toward new builds, the industry would face even greater paralysis. The European Union has begun to treat housing not as a collection of national embarrassments, but as a continental structural failure. The European Commission’s Affordable Housing Plan, presented in December 2025, commits over €43 billion in cohesion and social funding for 2021-2027, with an additional €10 billion for 2026-2027. The Commission is also targeting 60-day permit approvals and digital planning systems, reforms that would represent a genuine step-change in the tempo of delivery.
Ireland should lean into this framework with intent. For a region like Galway, where viability gaps have stalled plainly needed development, EU funding channelled into construction supports and workforce development could make the difference between projects that exist on paper and projects that actually get built.
Are we approaching a plateau? Not yet. The SCSI forecasts national price growth of around four per cent in 2026, a moderation from recent years but still above wage growth in most sectors. The more bullish scenario, six to eight per cent annual growth, remains live if supply activation continues to stall. A genuine plateau would require completions to scale toward 50,000 units, cost pressures to ease materially, and demand to moderate. None of those conditions are imminent.
What Ireland stands at is an inflection point of political will. The economics are understood. The constraints are mapped. The EU architecture is, for the first time, aligned with the urgency. A generation that cannot afford a home cannot build a future. Ireland has run out of time to treat this as a long-term problem. For more visit www.fairdealproperty.ie
Johnny Gannon is the founder of Fair Deal Property Auctioneers and Estate Agents. For advice on buying or selling in the Galway market, contact Fair Deal Property on 091 394593.
