Bank of Ireland chief economist Conall Mac Coille says homebuilding is now outpacing additional demand from population growth, creating capacity for future economic expansion.
Ireland’s population grew by 67,000 people in the year to April 2026, reaching 5.5 million, according to new Central Statistics Office (CSO) data.
While the pace of growth eased to 1.2%, it remains among the strongest in Europe and continues to underpin demand across the economy, from housing and infrastructure to labour markets and consumer spending.
Analysis by Bank of Ireland suggests the slowing rate of growth reflects a combination of falling birth rates and lower levels of inward migration compared with the exceptional inflows seen following the outbreak of war in Ukraine. However, migration remains a significant driver of population growth and continues to compare favourably with international trends.
“Homebuilding levels are now surpassing additional demand from population growth, substantially, for the first time and starting to eat into the pent-up demand that was built up due to years of under supply”
The latest figures show net inward migration of 48,000 people in the year to April, accounting for most of the overall increase in population. Natural population growth, the difference between births and deaths, contributed a further 19,000 people.
A fast-growing European population
According to Bank of Ireland Group Chief Economist Conall Mac Coille, Ireland remains one of the fastest-growing populations in Europe despite the moderation.
“The 1.2% population growth recorded in 2026 was the softest for Ireland in almost a decade (ex-Covid) but still ranks amongst the strongest in Europe. The out-turns for population growth are still close to the top of the range of the CSO’s projections, on track to hit 5.75m by 2030. Net inward migration of 49,000 is equivalent to 0.9% of the population, contributing the bulk of the 1.2% population growth recorded over the past year. The level of net inward migration into Ireland stands out from the most recent figures for the UK, 0.3% of the population and 0.5% average for a range of EU countries.”
The figures place Ireland among the fastest-growing countries in Europe. European Commission forecasts indicate only Cyprus, Luxembourg and Malta are expected to record faster population growth in 2026. By comparison, the Eurozone population is forecast to grow by just 0.2%, while population growth in England and Wales was estimated at 0.4% in 2025.
For businesses, sustained population growth continues to expand the available workforce and consumer base. Ireland’s labour market remains resilient, with unemployment low at 4.9% and vacancy rates remaining above pre-pandemic levels across most sectors.
Housing completions
The biggest question facing policymakers and businesses is whether housing availability can continue to support inward migration and broader economic growth.
Recent data points to meaningful progress. Housing completions reached 38,000 in the year to June 2026. Based on Census 2022 data showing average household sizes of just over three people in newly built homes, Bank of Ireland estimates that new housing delivered over the past year can accommodate more than 100,000 people.
That represents a significant shift for an economy that has spent years grappling with supply shortages in the housing market.
Mac Coille said: “The lack of housing will likely constrain migration. However, the 38,000 housing completions over the past 12-months is sufficient to accommodate over 100,000 people, set against population growth of 67,000 last year. Homebuilding levels are now surpassing additional demand from population growth, substantially, for the first time and starting to eat into the pent-up demand that was built up due to years of under supply.”
The development carries important implications for economic growth. A greater supply of housing could help sustain inward migration, ease labour shortages and support investment decisions by employers seeking to expand in Ireland.
The findings also suggest population growth is tracking near the upper end of the CSO’s projections for the second half of the decade. The CSO forecasts Ireland’s population could reach between 5.6 million and 5.75 million by 2030, depending on future migration patterns. Recent indicators, including a 32% increase in work permits granted to EU nationals during the first seven months of the year, point to continued population growth.
Greater investment in homebuilding
The improvement in housing delivery is also being reinforced by growing investment in the homebuilding sector. On Friday, Avenue Capital Group announced that AIB and Bank of Ireland will each invest €35 million in the Avenue Homebuilder Capital Solutions Fund, bringing total committed equity in the fund to more than €220 million.
The fund, which was seeded by the Ireland Strategic Investment Fund (ISIF) with €150 million in late 2025, provides equity capital to Irish homebuilders seeking to expand their operations and increase housing output. According to Avenue Capital, the current funding commitments have the potential to support land acquisitions capable of delivering more than 12,000 homes nationwide, subject to planning permission.
The announcement provides further evidence of the increasing flow of capital into residential development at a time when housing capacity is becoming a critical factor in Ireland’s economic growth. Alongside the 38,000 housing completions recorded in the year to June 2026, the additional funding points to a broader effort by both public and private sector investors to accelerate homebuilding and address long-standing supply shortages.
Separately, the fund has agreed an investment of up to €100 million in a joint venture with residential developer Castlethorn, supporting a pipeline of more than 7,000 homes, subject to planning, phasing and market conditions. The investment follows an earlier commitment to D/RES Properties and is aimed at helping established developers increase the scale and pace of housing delivery.
John Feeney, chief executive of Bank of Ireland’s Corporate and Commercial Banking division, said: “Bank of Ireland is already a major lender to the residential development sector, but we know that increasing housing supply requires a mix of funding solutions. Equity finance can help established Irish homebuilders scale up their operations, invest in growth and bring forward larger development pipelines.
“Our investment in the Avenue Homebuilder Capital Solutions Fund forms part of Bank of Ireland’s €100 million commitment to equity finance for homebuilding and reflects our belief in the important role equity capital can play in supporting increased new housing delivery across Ireland.”
👉 No tech background needed to bring your business into the AI age! Secure your Google AI Professional Certificate to complete the certification at no cost. Apply now and get started!
-
Bank of Ireland is welcoming new customers every day – funding investments, working capital and expansions across multiple sectors. To learn more, click here
-
For support in challenging times, click here
-
Listen to the ThinkBusiness Podcast for business insights and inspiration. All episodes are here. You can also listen to the Podcast on:
-
Spotify
-
SoundCloud
-
Apple
