Housing Market Outlook for 2026: Ireland and the UK

Both Ireland and the UK are navigating pivotal challenges and opportunities within their housing markets. Insights from the Banking and Payments Federation Ireland (BPFI) and UK Finance offer a detailed picture of the current landscape, shedding light on trends and providing a clear outlook for the year ahead. While the two countries face different dynamics, their housing sectors share common themes and distinct national characteristics.

Ireland’s Housing Market in 2025: Growth in Completions, Challenges in Supply

The BPFI Housing Market Monitor Q4 2025, published on 12 March 2026, highlights a year of strong growth in housing completions in Ireland. A total of 36,284 homes were completed in 2025, reflecting a 20.4% increase compared to the previous year. The final quarter of 2025 showed an even more impressive 38.5% rise in completions from Q4 2024. Dublin was a key driver, with more than 9,600 new apartments delivered. However, despite this positive development, housing commencements fell sharply by 65.5%, raising concerns about future supply and a potential shortfall in 2026 unless commencement rates increase.

In the mortgage market, drawdowns rose by 4.5%, while approvals decreased slightly by 2.2%. First-time buyers, who accounted for 60% of mortgage drawdowns, continue to dominate, although affordability remains a significant challenge, limiting broader market participation.

UK’s Housing Market Outlook: Modest Growth in Lending and Transactions

UK Finance’s Mortgage Market Forecast for 2026 provides a more cautious forecast for the UK market. Gross mortgage lending is expected to rise by 4% to £300 billion in 2026, while property transactions are expected to fall slightly, with 10,000 fewer sales than in 2025. Despite this decline, the remortgaging market will continue to play a significant role, with product transfers and refinancing activity growing by 10% as homeowners seek more affordable mortgage deals following recent interest rate hikes.

Mortgage arrears are expected to fall by 5%, reflecting better overall financial health among borrowers, while mortgage possessions (repossession actions) are forecast to rise modestly but remain below historical averages.

Shared Trends and Distinct Challenges

While the Irish and UK markets are dealing with differing dynamics, there are notable similarities:

• Affordability Issues: Both countries are facing ongoing affordability constraints. In Ireland, the strong growth in completions is tempered by the risk of a future supply shortage due to declining commencements. In the UK, affordability issues are reflected in the modest house price growth forecast and the decline in transactions.
• First-Time Buyers as Key Market Drivers: In both countries, first-time buyers remain a critical segment of the market. In Ireland, they drive the majority of mortgage activity, representing a significant share of new mortgage drawdowns. Meanwhile, in the UK, first-time buyers continue to make up a substantial portion of new home purchases, contributing to the overall demand for housing despite the challenging market conditions.
• Supply Pressures: Both countries are facing ongoing supply constraints. In Ireland, the decrease in housing commencements signals potential future supply shortages, while the UK is experiencing fewer property transactions, which may be linked to affordability challenges.

The Role of Government and Policy in 2026

Looking forward, government interventions in both countries will be crucial. In Ireland, addressing the decline in housing commencements will be vital to meeting future demand. Similarly, in the UK, government support for housing affordability and increased housing supply will be essential to stabilise the market, particularly in urban areas where demand remains high.

Conclusion: A Cautiously Optimistic Outlook

Both the Irish and UK housing markets face a cautiously optimistic outlook for 2026. Despite challenges such as affordability pressures and supply constraints, there are signs of resilience, particularly among first-time buyers and remortgaging activity. The coming year will require a strong policy focus in both countries to ensure the housing markets stabilise and can meet long-term needs.

For more detailed insights, the full BPFI Housing Market Monitor Q4 2025 is available for download here, and the UK Finance Mortgage Market Forecast for 2026 can be found here.