Central Bank Lowers Housing Forecasts, Puts Government Targets at Risk
Dublin: The Central Bank of Ireland has revised downward its housing construction forecasts through 2027, signalling that the government’s ambitious Housing for All plan is unlikely to meet its target of delivering 300,000 new homes by the end of the decade. The updated projections come amid concerns over slow construction starts, infrastructure deficits, and a tightening labour market.
Forecasts Reduced Across the Board
In its latest economic bulletin, the Central Bank projected that just 32,500 homes will be completed in 2024 — 1,500 fewer than estimated in March. For 2025, the forecast has been cut from 40,000 homes to 37,500, and completions in 2027 are now expected to reach 41,500, down from a previous forecast of 44,000.
The downward revision follows lower-than-expected completion figures in the first quarter of this year. The bank cited delays in new construction starts as a primary reason, underscoring structural challenges in the housing sector.
Key Bottlenecks: Infrastructure and Labour
Robert Kelly, Director of Economics and Statistics at the Central Bank, attributed the revised estimates to a persistent slowdown in construction activity. While the sector saw modest year-on-year growth in Q1, completions remain well below levels required to meet the national target.
Kelly highlighted the lack of critical infrastructure — particularly water and electricity connections — and a shortage of skilled construction workers as the principal obstacles. He noted that anticipated labour reallocation from commercial to residential construction has not materialised as expected, further hampering housing delivery.
Government Responds with Vow to Act
In response to the Central Bank’s revised figures, Tánaiste Simon Harris said the government is prepared to implement “robust and possibly controversial” measures to accelerate housing development. He acknowledged that such actions could face public criticism but insisted that urgent steps are needed.
“The planning system, water infrastructure, and the availability of serviced land are the main constraints,” Harris stated. “There is no magic wand, but we are determined to tackle these issues head-on.”
Housing Minister James Brown reinforced this message, emphasising that increased private sector investment is essential to meeting housing goals. Brown also confirmed that the Department of Housing will likely require additional funding before year-end, having already received €715 million in budget allocations earlier this year.
The central bank also downgraded its domestic economic growth forecasts, citing global headwinds including potential US trade tariffs. The economy is now expected to grow by 2% in 2024 — 0.6 percentage points lower than previously forecast — and 2.1% in 2025, down from 2.5%.
Despite slower domestic activity, the Bank projects that GDP will benefit from strong export performance, particularly in pharmaceuticals. Rising global demand for weight-loss and diabetes medications is driving increased output in Ireland’s pharmaceutical sector, offering a partial offset to weaker internal growth.
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