Property Insights by Johnny Gannon, Founder, Fair Deal Property
Ireland’s property market is standing at a crossroads.
That is not hyperbole. It is the only honest way to describe the state of the housing market in 2026. Across the country, and particularly in Galway, we are witnessing the collision of several powerful forces: chronic housing undersupply, rising construction costs, population growth, constrained affordability, and a planning and delivery system that continues to struggle to convert ambition into completed homes.
For buyers, sellers, developers, investors and policymakers alike, the questions are becoming increasingly urgent. How long can house prices continue to rise? Can first-time buyers realistically enter the market? Will developers be able to bring sufficient housing stock to market? And perhaps most importantly, what happens if the current imbalance between supply and demand continues for another decade?
The answers matter because Galway is no longer simply participating in Ireland’s housing market. It is becoming one of the clearest examples of the challenges facing the country.
The Galway property market has consistently outperformed expectations over the last number of years.
Driven by strong employment growth, a thriving medical technology sector, a growing life sciences industry, expanding educational institutions, and sustained inward migration, Galway continues to attract both homebuyers and investors from across Ireland and beyond.
Property prices in Galway city and county increased by approximately 8% to 9% during 2025. While this level of growth would once have been considered exceptional, it has become almost normalised in a market where demand consistently exceeds available supply.
The reality facing prospective buyers is stark. Quality family homes in desirable locations such as Salthill, Knocknacarra, Oranmore, Claregalway, Barna, Moycullen and Bearna often attract significant interest shortly after coming to market. In many cases, the number of buyers competing for well-presented homes far exceeds the available stock.
This is not simply a Galway phenomenon. Nationally, fewer than 12,500 homes are currently available for sale. However, scarcity is often felt more acutely at a local level, where supply constraints create intense competition for properties in sought-after communities.
The result is a market increasingly characterised by geographical divergence. Prime locations continue to experience robust price growth while more peripheral areas operate according to entirely different dynamics.
Whenever affordability becomes a concern, comparisons with the property crash inevitably emerge.
Yet today’s market differs fundamentally from the conditions that preceded the financial crisis.
In the years leading up to 2008, excessive lending, speculative development and unsustainable leverage fuelled rapid price inflation. The collapse that followed exposed deep structural weaknesses within both the banking system and the property sector.
Today’s challenges stem from a very different source.
The primary driver of house price growth is not excessive credit. It is insufficient supply.
Ireland’s population continues to grow. Household formation remains strong. Employment levels remain robust. Demand for housing continues to increase. Yet housing delivery consistently falls short of what is required.
This is not a speculative bubble driven by irrational exuberance. It is a structural shortage driven by simple economics.
When demand exceeds supply for a prolonged period, prices rise.
That is exactly what we are witnessing today.
Most housing analysts agree that Ireland requires between 50,000 and 60,000 new homes annually to meet existing and future demand.
Current delivery remains significantly below that threshold.
While housing completions are expected to reach approximately 35,000 units during 2026, that still leaves a substantial annual deficit.
Each year that this shortfall persists, unmet demand accumulates.
The consequences are visible throughout the housing system:
In Galway, these pressures are particularly evident because the city’s economic success continues to attract new residents while housing supply struggles to keep pace.
For many years, planning delays were viewed as the principal obstacle to housing delivery.
There is no doubt that planning reform remains necessary. However, recent data suggests that planning permissions alone are no longer the primary bottleneck.
Planning approvals for new homes increased significantly during 2025. On paper, this should have translated into a substantial increase in housing construction.
Yet many approved developments remain stalled.
The reason is straightforward: viability.
The economics of residential development have become increasingly challenging. Even when planning permission is secured, many projects struggle to proceed because the costs of delivery exceed what the market can realistically support.
The problem has effectively shifted from permission to activation.
In other words, Ireland is increasingly approving homes that never get built.
This distinction matters because it changes the nature of the solutions required.
Construction costs in Ireland remain among the highest in Europe.
Developers face a combination of challenges including:
The construction industry continues to experience significant skills shortages.
Many skilled tradespeople left the sector during the years following the financial crisis, and despite substantial recruitment efforts, the workforce has not fully recovered.
As demand for construction activity increases, competition for skilled labour intensifies.
Although some construction material prices have stabilised compared to the extreme volatility experienced in recent years, costs remain elevated.
Developers must also contend with ongoing uncertainty around global supply chains and energy costs.
Apartment construction remains particularly challenging.
In many locations, the cost of delivering apartments exceeds what purchasers can afford to pay. This viability gap has become one of the most significant barriers to increasing housing supply in urban centres.
Without targeted intervention, many apartment developments simply cannot proceed.
Government intervention now plays a critical role in maintaining activity within the new homes market.
Schemes such as Help-to-Buy and the First Home Scheme have enabled thousands of purchasers to bridge affordability gaps that would otherwise prevent homeownership.
These supports have become increasingly important because of the widening gap between construction costs and household purchasing power.
Critics often debate whether such schemes contribute to price inflation.
However, the reality is that without these supports, many developments would struggle to achieve sufficient demand to proceed.
The challenge for policymakers is balancing market support with long-term affordability.
The Central Bank’s macroprudential mortgage rules have undoubtedly strengthened the resilience of the Irish housing market.
By limiting borrowing relative to income and property value, these regulations have reduced systemic risk and helped prevent the excessive leverage that characterised previous cycles.
However, the housing market has changed dramatically since these rules were introduced.
For many first-time buyers in Galway, the mathematics no longer works.
A household earning a strong combined income can still find itself unable to purchase a family home within reasonable commuting distance of the city.
The issue is not irresponsible borrowing.
The issue is that house prices have risen faster than incomes for an extended period while supply remains constrained.
Recent adjustments relating to bridging finance suggest the Central Bank recognises the need for regulatory evolution.
As the broader framework review continues, policymakers must carefully examine whether existing lending limits remain appropriate within a market characterised primarily by supply shortages rather than excessive credit growth.
One of the most significant developments in housing policy during recent years has come from Brussels rather than Dublin.
The European Union has increasingly recognised that housing affordability is not simply a national issue. It is a continental challenge affecting economic competitiveness, social cohesion and long-term growth.
The European Commission’s Affordable Housing Plan represents the most ambitious coordinated housing initiative in EU history.
Its objectives include:
Particularly relevant for Ireland is the proposed European Strategy for Housing Construction, which aims to improve productivity within the building sector through innovation, digitalisation and skills development.
For Galway and other growing regional centres, access to European funding and expertise could help unlock projects that currently remain financially unviable.
One of the most common questions asked by buyers is whether house prices will finally stabilise.
The answer depends almost entirely on supply.
If housing delivery increases significantly, price growth is likely to moderate.
If current supply constraints persist, continued upward pressure remains inevitable.
Most forecasts suggest national price growth may moderate to approximately 4% during 2026.
That would represent a slowing compared to recent years.
However, even 4% annual growth continues to outpace wage growth in many sectors.
More importantly, a more bullish scenario remains entirely plausible if housing delivery fails to accelerate.
Until Ireland approaches the 50,000 to 60,000 annual housing target required to meet demand, genuine price stability will remain difficult to achieve.
The future of Galway’s economy is closely linked to its ability to provide housing.
The city continues to attract investment, talent and employment opportunities. Yet economic growth cannot be sustained indefinitely if workers cannot afford to live within reasonable proximity of their jobs.
Housing is no longer simply a social issue.
It is an economic issue.
It is a competitiveness issue.
And increasingly, it is a demographic issue.
A generation unable to access homeownership faces delayed family formation, reduced financial security and diminished opportunities for wealth creation.
These consequences extend far beyond the property market itself.
Ireland’s housing challenges are well understood.
The causes have been analysed extensively. The barriers have been identified. The solutions are increasingly clear.
What remains uncertain is whether the collective political and institutional will exists to implement those solutions at the scale and speed required.
Galway provides a powerful illustration of both the opportunities and challenges facing Ireland.
The city continues to thrive economically. Demand remains strong. Confidence remains resilient.
Yet without meaningful progress on housing delivery, affordability pressures will continue to intensify.
The crossroads is real.
The market will not stand still.
The only question is whether Ireland chooses the path ahead or allows circumstances to choose it on our behalf.
For buyers, sellers, investors and developers, the coming years may prove among the most consequential in the history of the Irish property market.
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.