Rising house prices are often regarded as good news.
Like rising employment figures, they can be taken as a sign of a healthy economy and growing prosperity.
According to the latest MyHome report, the median asking price for a property in Donegal is now €270,000, around €20,000 higher than a year ago. That’s an increase of 8 per cent.
It may be welcome news for those with a house to sell. For those trying to buy one, however, it adds to the difficulties of finding somewhere affordable at a time when homes are already in short supply.
The implications may also go beyond the immediate difficulties facing buyers. Set against what people working in Donegal actually earn, these increases also raise the possibility of a housing market becoming increasingly disconnected from local earning power.
The latest Central Statistics Office data, for 2025, puts median weekly earnings in the county at €635 before tax, the lowest in the country, compared with €759 nationally.
A single first-time buyer earning that amount would generally be limited to a mortgage of around €132,000 under Central Bank lending rules. To buy a property at Donegal’s median asking price, they would need a further €138,000 in savings or other funds.
House prices depend to a large degree on what buyers are willing and able to pay, and purchasing power is not confined by county boundaries. Buyers may have equity from selling elsewhere or incomes that bear little relation to local wages. That’s true of property markets everywhere.
The particular risk for Donegal is that its relatively low prices could attract increasing demand, pushing house prices closer to those in more expensive counties without local wages keeping pace. Donegal could still appear relatively cheap by national standards while becoming increasingly unaffordable for the people living and working here.
CSO figures published this week show that house prices in the Border region, which includes Donegal, increased by 9.1 per cent in the year to August, compared with 4.9 per cent nationally. That was the highest annual increase of any region outside Dublin.
While the figures cover five counties, such rapid growth in a traditionally lower-priced region is something to watch, particularly when local earnings remain relatively low.
For first-time buyers, higher prices present an immediate challenge. They have no property equity to draw upon, and many are paying rent while trying to save for a deposit.
And where do people go when they are priced out? In Donegal, looking further afield can mean a long commute, with additional transport costs, or moving away from family support. For some, leaving the county may seem more realistic than buying a home in it.
The 2022 Census recorded 17,112 adults living with their parents in Donegal, up 1,749 on 2016. Nationally, 23 per cent of those aged between 25 and 34 lived with their parents, compared with 17 per cent in 2011.
People remain at home for many reasons, but a shortage of affordable housing hardly makes it easier to leave. The consequences extend beyond individual households. A lack of affordable homes can affect where younger families settle and how easily employers attract staff.
In Gaeltacht communities, it raises another concern about the future of the Irish language if people who grew up speaking it struggle to remain.
The ESRI offered a wider warning in September, estimating that Irish house prices were around 17 per cent above levels consistent with economic fundamentals, including incomes and interest rates.
Its assessment was national, not specific to Donegal, and it stressed that today’s market differs from the credit-fuelled bubble before the financial crash.
But a housing market does not have to be in a speculative bubble for rising prices to have serious consequences for people earning local wages.
In the 2027 Budget the government committed €3 billion for social housing delivery and more than €1 billion for starter homes and affordability supports.
Increasing supply is essential, but in Donegal the measure of success will be how many additional homes are delivered here that people working locally can actually afford.
Taken alone, rising house prices are not a measure of prosperity. And if prices continue to move beyond what people can earn in Donegal, where does that leave those hoping to buy a home on a local income?
Fresh Take is written by Sabrina Sweeney and features every Thursday in the Donegal News.