Central Bank revises down housing and growth forecast
The Central Bank is revising downwards its forecast for how many homes will be built this year and over the following two years.
It expects 32,500 will be finished this year, a reduction of 1,500 on its previous forecast last March.
It says 37,500 will be completed next year, down 2,500 from its last projection, and 41,500 will completed in 2027, down 2,500.
It would mean the Government would miss its targets for house completions for each year.
The Central Bank says the reasons for the downward revision is that completions of homes are below expectations in the first three months of the year, while commencements “dropped sharply”.
The housing projections are “subject to considerable downside risk given the current bottlenecks in housing supply and infrastructure,” according to the bank.
The Central Bank highlights a lack of water and electricity connections and a shortfall of construction workers as key challenges for increasing construction.
It says increasing productivity in the sector is “essential to enable it to fulfil the increasing demand for housing”.
The bank is also downgrading its forecast for growth for the domestic economy for this year and next year due to US tariffs.
It expects the growth, as measured by modified domestic demand, will be 2% this year, a drop 0.6 percentage points on the previous projection.
It has reduced its forecast for next year by 0.4 percentage points to 2.1%.
While the outlook for the domestic economy is down, the expectations for gross domestic product, which includes the impact of multinationals, is being raised due to a surge in exports to the US ahead tariffs being imposed by the Trump administration.
This is largely being driven by a rise in the export of weight loss and diabetics drugs produced by the pharmaceutical sector in Ireland.
Director of Economics and Statistics at the Central Bank Robert Kelly said: “With the global economic backdrop continuing to shift, there is heightened uncertainty on the outlook for the Irish economy.”
The bank also examines the threat to the public finance from a collapse in the windfall corporation tax receipts collected by the State.
It finds that in a severe scenario, there would be a €17 billion deficit by 2030.
New rent regulations will protect renters – Browne
Minister for Housing James Browne said rents may go up, but that the Government’s plan is to get them down by increasing housing supply.
Speaking on RTÉ’s Morning Ireland, he said that new regulations around rent would hand more protection back to renters.
“Rents may go up in certain cases. I certainly hope they don’t. Our aim is to get rents down by increasing the level of supply. That’s what we need to see happen,” he said.
“Rents are going up at the moment anyway, especially in those areas that are not covered by Rent Pressure Zones.
“The only way you can get rents down is to increase supply and that’s by having a certain system in place for tenants, for landlords and investors. The current system is clearly not working,” he added.
Mr Browne said that tenants in new builds would have protection “by way of an inflationary cap”.
“Properties commencing from the date of the Government decision just over a week ago, it will certainly take some time for them to come on to the market. They will have a tenant protection by way of an inflationary cap,” he said.
“The 2%, if you like, that exists on current properties, we won’t apply to new properties and that’s to get the investment into the country.
“We need to go from 30,000 to 50,000 or 60,000 homes. We can’t. The Government is already delivering 50% of all homes in this country, we want to deliver more social, affordable homes. But to get those extra 20,000 or 30,000 thousand homes per year, we need the private sector and that means significant investment and how we can activate that,” he added.
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