Ireland Residential Market Review: Challenges and Opportunities in 2025
Hooke & MacDonald have published their Annual Report focusing on Irish New Homes and the Residential Investment Sectors – this is a brief summary, but you can register and download the full report here: https://www.hookemacdonald.ie/research/the-residential-market-report-2025
Briefing Document: Ireland Residential Market Review (2025)
Executive Summary:
This report outlines the key challenges and opportunities facing the Irish residential property market in 2025. It highlights a significant undersupply of housing, particularly apartments, driven by viability issues, funding constraints, and regulatory impediments. The report emphasises the need for increased housing delivery across all tenures to meet growing demand and support economic growth. Government intervention, private investment, and policy reform are crucial to address the housing deficit and create a sustainable residential sector. The report stresses an urgent need for change to the current rent regulations, as the current system of RPZs is regarded as ‘un-investable’.
Key Themes & Ideas:
Housing Shortage & Demand:
- The report identifies a significant housing deficit in Ireland, estimated at 485,000 homes, with 185,000 in the Dublin region alone. The Housing Commission estimated a deficit of 250,000 homes.
- The report estimates over 60,000 new homes are needed annually, and that previously estimated figures were woefully underestimated.
- “The State housing stock shortfall is now estimated by this author to be 485,000 with the Dublin Regional figure at 185,000.”
- Population growth continues to outpace housing supply, driven by employment growth and inward migration.
- Dublin’s economy is thriving as Ireland has added over 150,000 jobs annually, but housing supply falls short of demand.
Viability & Funding Challenges:
- A major obstacle is the lack of viability in constructing apartments, even with planning permission in place.
- “According to data compiled by the four local authorities in Dublin in the second half of 2024, there is planning permission in place for 82,700 homes; 83 percent of them apartments…The problem with the bulk of the 56,208 units yet to start is that they are not viable to construct and cannot be funded at present.”
- High construction costs, particularly for basement parking, significantly impact project feasibility. A 2024 report found the cost of delivery of a two-bedroom apartment in Dublin ranged from €549,790 in the suburbs to €591,783 in urban areas. The hard construction costs were estimated to be €266,058.
- Limited availability of bridging finance hampers the second-hand housing market.
- Banks have reduced their development lending since the 2008 financial crisis.
- Smaller developers face challenges in securing sufficient equity for projects, even with debt financing.
- Government schemes like the Croí Cónaithe Cities Scheme are designed to address apartment viability through subsidies.
- €6 billion was committed to housing initiatives in the 2025 Budget via HBFI, the National Treasury Management Agency and the LDA.
Role of Social & Affordable Housing:
- Increased investment in social and affordable housing is welcomed and considered essential.
- “The considerable and welcome investment by the Government and State funded bodies in social and affordable housing is accelerating and is likely to continue for the foreseeable future.”
- The Land Development Agency (LDA), Approved Housing Bodies (AHBs), and local authorities are key players in delivering this housing.
- Government funding in this sector makes it economically advantageous for builders and developers to cater to this demand, especially for unviable apartment sites.
- Schemes like the Affordable Housing Scheme, providing equity facilities, are gaining traction.
Impact of Rent Controls:
- The report is highly critical of rent controls (Rent Pressure Zones – RPZs), arguing they impede supply and deter investment in the private rental sector.
- “Residential funding and investment continue to be impacted by the restrictive Irish rent regulations, with a 2% rent cap increase for private rental sector and student housing as a result of the Rent Pressure Zone (RPZ) regime in place.”
- Many parties familiar with international systems regard the current Irish system of restricting rent increases as ‘un-investable’.
- The report suggests reforms to allow market rents to be set between tenancies and adjusted for inflation during a residency.
- The RPZs are due to expire at the end of 2025 and, according to the report, need to be seen as a priority if Ireland is to meet its housing needs.
- The Taoiseach has acknowledged the need for private investment in the rental market and indicated a review of rent control measures.
- There has been no new private rental accommodation developed of scale across Ireland in the last 16 years, except for that seen in Dublin and some Dublin-commuter towns in the last 8 years. Most landlords are leaving the market.
- Recommends reforming rental regulations and allowing for rents to be marked-to-market both when tenants vacate and for newly completed properties that have never been let.
Investment & Investor Sentiment:
- International sentiment towards the “Living Sector,” including the Private Rental Sector, is favourable, but Ireland needs to create the right conditions to attract investment.
- The sudden introduction of a 10% stamp duty (increased to 15% in October 2025) on investor purchases of houses and duplexes has deterred new investment.
- Residential refinancing availability is healthy, indicating confidence in the Irish residential investment story.
- The Department of Finance has recognised the need for both domestic and international capital to facilitate new housing development.
Demographics & Housing Needs:
- Ireland’s population continues to grow, with a significant cohort aged 35-54.
- The number of people aged 65 years and over is set to increase significantly, with this number set to reach over 1 million by 2030.
- There is a need for diverse housing typologies, including high-density apartments in city centres and medium-density housing in suburban areas.
- There is a need for catering for an aging population, and the Government and country are going to have to be innovative around this.
- Declining household sizes contribute to increased housing demand.
Government Schemes & Policy:
- The Help to Buy scheme has been successful in assisting first-time buyers and impacting the supply side by giving confidence to builders.
- The First Home Scheme assists first-time buyers in bridging the gap between their mortgage, deposit, and the price of a new home.
- The report advocates for adjustments to the STAR (Secure Tenancy Affordable Rental) Scheme to make it institutionally fit-for-purpose and provide a commercial return.
- Recommendations include removing impediments in the planning system, zoning more land for housing, and extending planning permissions on unviable apartment sites.
Regional Development & Growth:
- Dublin’s population continues to grow, with significant growth also seen in surrounding counties and towns.
- Commuter counties like Meath, Kildare, and Wicklow are experiencing population growth and increased demand for housing.
- Towns outside of Dublin, such as Athlone and Mullingar in Westmeath, are identified as regional growth centres.
Planning and Governance
- Too little autonomy is devolved to regional and local authorities.
- There are too few town planners and almost no urban designers in our regional and local authorities.
- Training in these and other urban management disciplines must be widened to provide for a plan-led future.
- Good governance and urban design needs co-ordinated research focused on near-term issues and long term national goals.
Recommendations:
- Reform rental regulations to incentivise private investment in the rental sector.
- Provide incentives for higher-density apartment development and student accommodation.
- Bring certainty to the funds regime to encourage large-scale capital deployment.
- Adjust the STAR scheme to make it a commercially viable investment option.
- Continue support for social and affordable housing.
- Remove planning impediments and zone more land for housing.
- Foster a pro-funder and pro-investment culture grounded in policy certainty.
- Address the shortage of bridging finance through government and banking sector initiatives.
- Government to engage with private sector over the coming months and develop policies that are fit for purpose and promote the supply of new funding and rental accommodation.
- Need to increase the number of planning and urban design staff across all levels of governance
Conclusion:
Addressing Ireland’s housing crisis requires a multifaceted approach involving government intervention, private investment, and policy reform. Removing barriers to development, creating a stable investment environment, and fostering collaboration between public and private sectors are crucial to increasing housing supply and meeting the needs of a growing population. Failure to do so risks hindering economic growth and driving emigration.
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