Franklins Estate Agents – Q1 Property Market Update 2026
As we enter another year in the Donegal property market, it is worth reflecting on the journey the industry has travelled over the past two decades.
Since Franklins first opened its doors in 1999, we have experienced almost every conceivable market cycle.
From the uncertainty surrounding the Foot and Mouth crisis in the early 2000s, to the extraordinary boom years that followed, the deep recession and property crash after 2008, the disruption of the Covid pandemic, and more recently the ongoing defective block crisis in Donegal — the property sector has rarely had what could be described as a “normal market”.
While there have certainly been strong and prosperous periods, they have often been followed by very challenging years for buyers, sellers, builders and agents alike.
Through each cycle, Franklins has remained at the centre of the Donegal property market, helping clients navigate both the opportunities and the difficulties that each period has presented.
Current Market Conditions
At present, the property market in County Donegal remains very strong. Demand for homes continues to significantly outstrip supply, with most well-presented properties selling within the first month of coming to market. In many cases, competitive bidding is a regular feature of the sales process.
However, the fundamental issue facing the market today is the chronic shortage of available housing.
Anecdotally, we estimate that approximately 30% of the county’s housing stock has been affected by defective concrete blocks. When this is combined with the fact that there has been very limited meaningful residential construction in Donegal since the crash of 2008, the result is a significant and ongoing supply shortage.
Rental Market Pressures
The rental market has also undergone a notable shift in recent months. Regulatory changes introduced in March have further altered the landscape for landlords, many of whom were already operating in an increasingly complex environment. While these measures are designed to enhance tenant protections, they have also contributed to a continued contraction in supply, as some landlords exit the market or reconsider their position.
The result is an extremely tight rental sector, with very limited availability and strong competition for the few properties that do come to market. This ongoing shortage is placing considerable pressure on tenants and, in some cases, is feeding back into the sales market, as renters look to secure longer-term stability through home ownership.
The Need for New Housing
Ultimately, the only sustainable solution to the current housing crisis is the construction of more homes.
However, the economics of building have changed dramatically. Due to increased construction costs, new build semi-detached homes in Donegal are now typically starting from around **€350,000**.
While this price point may be sustainable in larger urban centres such as Letterkenny, where employment opportunities and salary levels are generally higher, it presents a challenge in many of the county’s smaller towns and rural areas.
In these locations, the local employment base often does not support mortgages at this level. As a result, demand for new homes at these price points is more limited, and developers are understandably reluctant to commence construction projects.
This creates a difficult cycle: without sufficient demand at the required price point, new homes are not being built, and pressure on the already limited supply of second-hand homes continues to intensify.
Pressure on Second-Hand Stock
With limited new construction and a significant portion of existing housing affected by defective blocks, the market is increasingly reliant on a small volume of second-hand properties becoming available.
This scarcity of supply is one of the key drivers behind the continued competitive bidding environment we are seeing across many parts of the county.
Looking Ahead
Despite these challenges, the underlying demand for homes in Donegal remains strong. Population growth, returning emigrants, and lifestyle changes following the pandemic have all contributed to sustained interest in property across the county.
However, until meaningful levels of new housing construction return, the imbalance between supply and demand is likely to remain the defining feature of the Donegal property market.
At Franklins, with over 25 years of experience in the local market, we remain committed to providing clear, informed insight and to acting as a trusted voice in the Donegal property sector.