Ireland's Rental Crunch: When Will the Supply Catch Up?

Rental market in the squeeze, never more so. Irish rents increased by 4.4% in 2025 and in early 2026 supply was at a 20 year low. And it’s not looking like housing pressures are going to ease on the Emerald Isle any time soon. The Daft.ie report has shown the housing affordability issue is continuing to escalate, just as the new national rent reduction guidelines have come into play.

Rentals now 34% higher than pre-Covid levels and 77% higher than 10 years ago New rent levels are being imposed on renters in a market that has little supply to meet demand. Average monthly rents for two-bedroom apartments are now in the region of €2,086. Rentals are 34% higher than pre-Covid levels and 77% higher than 10 years ago. Rentals are dropping in number, down 22% year on year, with fewer than 1,800 properties listed across the country in February – the lowest February number of listings in over 20 years. The rates in the capital are increasing by over a third annually and average monthly rents for two-bedroom apartments are now €2,438. The centre of the city is particularly expensive, with apartment rentals ranging from €2,600 to €2,700 per month.

Meanwhile rent inflation in provincial cities such as Galway and Cork is no relief valve with rents soaring by over 10% in the last quarter of the year. The new rent control legislation means rent increases on new tenancies will be limited to 2% per annum or the rate of inflation or what ever is the lower of the two. As of 1st March 2026 this new rate will come into play. Current tenancies will not be impacted by the new legislation, leaving many land lords struggling to come to terms with reduced potential rental income, against a backdrop of significant restrictions on lettings, on properties they may have been hoping to let out for years to come.

What’s driving the crunch? Beyond the specifics of policy, the answer is that there is widespread uncertainty, according to the Economic Bulletin from Trinity College economist, report author, Ronan Lyons. Rent controls won’t stop landlords listing properties, or landlords from deciding to sell rather than simply rent out a property at a rate set by the State. The underlying reason for the crunch is simple: supply has been tight, with the availability of properties to rent being in the order of only around 40 per cent of what it was prior to the pandemic. In such a tight market, without a burst of new supply – be it build-to-rent or otherwise – rents will continue to go up.

There’s a reason Ireland is a hotspot for international investors on the hunt for stable rental yields, despite ongoing struggles with a housing market that’s fraught with risk and opportunity. The reason: Ireland has a terrible surplus of unsold and underutilised housing stock, which has driven up home prices far beyond anything caused by simple market forces. The speed at which prices are climbing is also caused by factors other than genuine demand, such as infrastructure and regulatory constraints. While off-the-plan developments could be a play in a market where high yields are expected, and projects that promise strong occupancy rates despite supply constraints are being rapidly brought to market, investors will need to be nimble in order to get to grips with Ireland’s increasingly complex regulations.

Practical Insights for Investors and Buyers:

1. Rent control rule changes may slow housing price appreciation; New rent control rules in New York may stave off price growth, but could also deter landlords from renting apartments.
2. Look beyond Dublin—second tier cities are seeing faster rent growth and potentially higher returns on investment per price point.
3. Follow new build and off-plan projects to help ease supply shortages in future months when the properties will be available for capital growth.
4. Consider Uncertainty Risks Landlord behaviour can change quickly and you need to be aware that market volatility can significantly impact rental yields and property availability.

Stakes Ahead of Us As we take a step back to look, rental yields in our domestic market are reducing, in line with an upward shift in yields elsewhere. Housing demand remains elevated while the rental market is becoming even more congested with increasing supply needed to keep affordability measures stable, all the while constraining any over-acute surge in rental inflation, and potentially much to the dismay of some, the rewards will remain for those who get the timing and pitch right. Our rental market, particularly in the space of affordable and secure accommodation, will be one of the challenges facing governments and institutional investors in the Stakes Ahead of Us series of publications.