Irish Housing Supply Threatened as New Builds Plummet

Ireland’s housing supply faces significant risks after new housing commencements fell by more than three-quarters in 2025, according to a recent report from the Banking and Payments Federation Ireland (BPFI). The decline, particularly sharp in key local authorities, raises concerns about future housing availability.

Sharp Decline in Housing Starts

Just over 16,000 housing units began construction in 2025, a dramatic decrease from the more than 69,300 commencements recorded in 2024. The BPFI report, covering the final quarter of 2025, highlights a particularly steep decline in activity within Dublin City Council, Fingal County Council, and South Dublin County Council. Commencements in Fingal and South Dublin fell by almost 84 percent.

Impact on Future Supply

BPFI chief economist Ali Uğur warned that the “steep decline” in 2025 poses “risks to future supply” unless there is a “significant rebound” in scheme and apartment commencements in 2026. Uğur also indicated that the low level of commencements points to a “likely reduction in output” in early 2027.

Factors Contributing to the Decline

The drop in new housing starts may be attributed to a surge in building activity in 2024, as developers accelerated construction to take advantage of expiring development-levy waivers.

Regional Variations and Housing Types

One-off dwellings accounted for 23 percent of all housing starts, the highest share since 2018. Approximately 5,900 housing units were started in the last three months of 2025, representing a 65.5 percent year-on-year decrease.

Completions Show Positive Trend

Despite the decline in commencements, almost 12,000 new dwellings were completed in the last quarter of 2025, a 38 percent year-on-year increase. Total housing completions for the year reached 36,284, a 20.4 percent increase compared to 2024 – the highest annual volume since the 12 months ending June 2009.

Apartment Completions Drive Growth

The increase in completions was largely driven by a sharp rise in apartment construction, particularly in Dublin, where apartment output increased by over 46 percent to more than 9,600 units. One-off homes represented just over 16 percent of national completions, but accounted for at least 40 percent of all new dwellings in nine counties.

Outlook for 2026

Uğur suggests that homes started in 2024 must be completed by the finish of 2026 to qualify for levy waivers, potentially leading to nearly 39,000 housing completions in 2026 if “the strong momentum in construction continues.”

Planning Permissions Increase

The number of residential units granted planning permission rose by 29.4 percent to 11,142 in the third quarter of last year, the highest number since the second quarter of 2023.

Second-Hand Home Sales Decline

The number of existing properties sold fell for the third consecutive year to 38,502, the lowest level since 2020. Existing properties accounted for 76.1 percent of household market purchases of residential property in 2025, suggesting fewer second-hand homes are available and more homeowners are choosing to remain in their current properties.

Property Prices Continue to Rise

Residential property prices increased by 7 percent in the year to December, following an 8.9 percent increase in 2024. The median new dwelling price in December was €440,000, approximately €85,000 higher than the previous year.