DUBLIN, Ireland: Buying or renting a home in Ireland is difficult, according to two new reports. One report says house prices are above levels supported by economic conditions, while another shows rents rising.

Research by the Economic and Social Research Institute (ESRI) estimates that Irish house prices are about 17 percent above the level supported by economic factors such as incomes, interest rates and population trends.

The ESRI said this represented a significant degree of overvaluation and was higher than its previous estimate. In December 2024, it found that prices were about 10 percent above the level supported by fundamentals.

However, the ESRI said the current situation was not similar to the property bubble that developed before Ireland's financial crash.

Dr Paul Egan, a senior research officer at the ESRI and report co-author, said the main problem now was affordability rather than a financial crisis.

"The key thing we wanted to get across is that this is an affordability issue, but that it isn't the same as the financial crisis," he said.

Before the 2008 crash, Irish house prices were more than 35 percent above levels supported by economic fundamentals. They then fell sharply and were around 20 percent below their expected level by 2012.

The ESRI said the earlier boom was driven partly by rapid credit expansion. Loose lending standards and mortgages worth more than property values left households with unsustainable debt levels.

Today's market is different because the Central Bank introduced stricter mortgage lending rules after the crash. These rules have helped keep borrowing more sustainable.

Egan said prices were now rising faster than incomes, leaving many households unable to afford homes. Middle-income households faced the greatest pressure because the gap between house prices and income was particularly wide.

Household debt and personal credit remain well below the levels seen during and after the financial crisis, showing a stronger financial system.

At the same time, new figures from the Residential Tenancies Board (RTB) show that renters are facing steep increases. The average monthly rent for a new tenancy during the first three months of the year was 1,839 euros, up 9.1 percent from a year earlier.

The increase came despite rental rules introduced on March 1. The measures were intended to provide greater security for tenants and limit rent increases.

Opposition parties have criticized the changes, while Taoiseach Micheál Martin has defended them. He said reform was needed for long-term sustainability.

Martin also said the shortage of homes was the main challenge behind high housing costs. He said the Government was making progress on construction but wanted more houses and apartments built this year.

Social Democrats housing spokesperson Rory Hearne criticized the Government's approach, describing the situation as "Armageddon in the rental market" and calling for the March 1 changes to be reversed.

Together, the reports show the scale of Ireland's housing problem. Prices are not showing the same risks as before the 2008 crash, but homes remain unaffordable for many people, while rising rents are placing further pressure on households.