Ireland faces inflation risks and cooling housing market

Irish inflation housing market tax base fragility government spending property price inflation

The Economic and Social Research Institute (ESRI) warns that Irish inflation is expected to remain above 3% in the coming years, with forecasts of 3.6% this year and 3.3% in 2027. Food costs remain a significant vulnerability, potentially exacerbated by weather-related import disruptions and global energy volatility.

Fiscal concerns have also been raised regarding government spending, which is currently outpacing established limits. The Department of Health and the Department of Social Protection have both seen expenditure increases that exceed official projections. Furthermore, the ESRI highlighted the fragility of Ireland’s tax base, noting a heavy reliance on a narrow group of U.S.-based technology and pharmaceutical multinationals.

In the housing sector, annual property price inflation slowed to 3% in September, down from higher rates earlier in the year. This cooling is attributed to rising interest rates and decreased buyer demand. While the average home sold for nearly €445,000, the premium buyers offer above listed prices has shrunk from 6-7% a year ago to between 2% and 3% currently.