Franklins Estate Agents – Q2 Property Market Update 2026
In our Q1 update, we reflected on more than 25 years of market cycles and the defining challenge of the current period: a chronic shortage of housing in County Donegal. Three months on, the fundamentals remain the same — but the second quarter of 2026 has brought a noticeable change in the temperature of the market, along with some significant developments that are worth reporting.
A Calmer Market — But Still a Strong One
Properties across the county are continuing to sell well. However, the aggressive nature of the market that we witnessed in the first quarter of the year — with intense competitive bidding a regular feature of almost every well-presented listing — has noticeably eased in recent months.
This is reflected in the national picture too. The latest Daft.ie report for Q2 2026 recorded asking price inflation of 3.8% year-on-year, down from 6.8% a year earlier, and most commentators now expect price growth of around 4% for 2026 as a whole — a considerably more sedate pace than the market has seen in recent years.
To be clear, this is a cooling in price inflation and in the intensity of bidding, not a downturn. Demand for good homes in Donegal remains strong, quality properties are still going sale agreed within weeks, and supply remains well short of what the market requires. But for buyers who found the frenzied conditions of recent quarters difficult, the current environment is a somewhat more measured one — and in our view, a healthier one.
A Steady Flow of Instructions
While some agents are reporting low stock levels, Franklins has enjoyed a steady supply of new instructions throughout the year to date — with Daft.ie Business Intelligence data positioning us as the agent with the second largest stock of available property in the county this year.
In a market defined by scarcity, this matters for both sides of a transaction. For buyers, it means Franklins consistently offers one of the widest selections of homes in Donegal. For vendors, it reflects the trust that sellers across the county continue to place in us — and the strength of the buyer audience that an active, well-stocked agency attracts. Quality properties listed with Franklins are being seen, viewed and sold.
Significant Change in the Rental Market
The other major story of the quarter has been the rental sector, where the regulatory changes introduced in March have now firmly taken effect. The extension of Rent Pressure Zone rules nationwide, the cap on rent increases for existing tenancies, the introduction of six-year minimum tenancies, and the new provisions allowing rents to be reset between tenancies have together brought about the most significant reshaping of the rental landscape in many years.
For landlords, the environment is now considerably more regulated, and we are aware that many are actively reconsidering their position — Residential Tenancies Board figures show notices of termination in the second half of 2025 were up almost 40% on the year before, and that trend has continued into 2026. Each landlord exit adds a property to the sales market but removes a home from an already extremely tight rental sector.
For tenants, the reality remains one of very limited availability and strong competition for the few properties that do come to market. We would encourage any landlord weighing up their options under the new rules to take proper advice before acting — the changes materially alter the calculation for some owners, and not always in the direction first assumed.
The Return of Private New Builds
Perhaps the most encouraging development of the quarter has been the noticeable increase in private new build activity across the county. After more than a decade and a half of very limited meaningful residential construction in Donegal, we are now seeing developers commence schemes in a number of locations — and this is precisely what the market needs.
As we have said consistently, the only sustainable solution to the current housing shortage is the construction of more homes. So, this renewed activity is genuinely welcome.
The key question, however, is one of economics. With new build semi-detached homes now typically priced from around €350,000 upwards, builders face two related challenges. First, can local Donegal salaries support mortgages at these price points? In Letterkenny and the larger centres, where employment opportunities and income levels are stronger, the answer may well be yes. In many of the county’s smaller towns, the local employment base makes that a much harder equation.
And second — will developers achieve enough sales volume to see out the developments they start? Commencing a scheme is one thing; sustaining the rate of sale needed to fund and complete it, phase by phase, is another. The coming quarters will tell us a great deal about the depth of demand at these price levels across different parts of the county.
We will be watching both questions closely, because the answers will shape the supply picture in Donegal for years to come.
Defective Concrete Blocks: A New Standard — and a Question for the Lenders
The most significant development of the quarter on the defective blocks front was the long-awaited publication in early June of the revised I.S. 465:2026 standard by the National Standards Authority of Ireland — almost six years after the review was first ordered.
The revised standard represents a fundamental shift in the official understanding of the crisis. Where the original 2018 standard focused on mica as the primary cause of block degradation in Donegal, the 2026 revision acknowledges what the scientific research has been telling us for some years: that iron sulfide minerals such as pyrrhotite, and the internal sulfate attack they cause, are the principal driver of the severe and rapid deterioration we see in affected homes. Mica remains on the list of problematic minerals, but the science now tells us it plays a supporting, lower-level role — with its most damaging contribution being as an accelerator of internal sulfate attack rather than the root cause itself. References to mica-driven freeze-thaw damage have been removed entirely, and the revised standard also introduces testing of foundations for the first time.
This is a welcome and overdue alignment of the official assessment framework with the science. But it raises an obvious and important question — one that matters greatly for the functioning of the property market in this county.
If the science, now formally reflected in the national standard, tells us that mica plays only a supporting, low-level role, why do lenders reportedly continue to decline mortgage applications based on mica levels in block test results? We continue to hear of otherwise sound properties being refused finance on mica content alone — an approach that now appears out of step with the very standard that governs how these buildings are assessed. It is worth noting that the banks’ and insurers’ own representative bodies, through the DCB Stakeholder Forum, argued during the consultation process that internal sulphate attack — not mica — is the proven cause of damage. Having accepted the science on paper, the lending sector should now reflect it in practice.
Until it does, homeowners in properties with elevated mica readings but no evidence of the minerals that actually drive severe degradation will remain unfairly locked out of the market. We would urge the lending institutions to review their criteria in light of I.S. 465:2026 as a matter of priority.
Separately, further provisions of the DCB (Amendment) Act 2025 were also commenced in June, allowing families in adapted homes to build a replacement dwelling elsewhere on the same site and enabling certain semi-detached homeowners to rebuild alongside adjoining properties — practical and welcome improvements to the grant scheme. As always, we continue to advise clients on both sides of transactions involving affected properties.
Looking Ahead
The second half of the year traditionally brings the busiest trading period, and the underlying demand for homes in Donegal remains strong. A calmer bidding environment, a reshaped rental sector, and the welcome return of private construction make this a quarter of genuine transition — and how the new build story develops will be one of the defining themes of the year ahead.
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. If you are considering selling, buying, or simply want an up-to-date view on the value of your property, we would be delighted to hear from you.