The Government’s housing targets will not be met this year or next, the Economic Social and Research Institute (ESRI) has warned.
In its latest quarterly economic bulletin, the think tank predicted house completions would rise to 35,000 this year after a better-than-expected out-turn in the second quarter.
While this would be an increase on the level of completions seen last year (30,330), it would still fall short of Government targets.
Completions for next year are also expected to come in below target at just under 36,000 on the back of what the ESRI described as “a notable slowdown in commencements this year following the policy-related spike in 2024”.
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Commencements hit a post-crash record last year as builders rushed to avail of development levy waivers brought in to stimulate housing construction, but they have fallen away since.
The Coalition has set a target of building 303,000 homes between 2025 and 2030, when its term in office is due to end.
The revised targets would mean delivering an average of 50,500 homes per year.
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Under the revised Housing for All targets set by the previous administration, that meant delivering 41,000 homes this year, rising incrementally to 60,000 homes in 2030.
However, a slowdown in construction linked to higher borrowing costs has placed a question mark over these targets.
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In its report, the ESRI also highlighted a rise construction sector earnings relative to other sectors, which it warned might have implications for the delivery of the National Development Plan (NDP) and the housing targets.
“As evidenced by the recent rise in construction wages, the sector is unlikely to have the capacity to simultaneously increase housing output substantially, invest in critical infrastructure, and retrofit and renovate the existing housing stock at full employment,” the ESRI said.
“Trade-offs will have to be made and certain activities given priority to meaningfully address these bottlenecks,” it said.
In its latest assessment, the ESRI said the Irish economy continues “to perform robustly” despite the uncertainty triggered by US tariffs.
The most recent data show strong growth in consumption expenditure (up 3 per cent annually in the second quarter), in employment (up 2.3 per cent annually in the second quarter) and in tax receipts (4.4 per cent up to the end of August).
The institute said it expected “this positive situation to continue over the forecast horizon”.
It predicted modified domestic demand (MDD), a more accurate measure of the domestic economy, would grow by 3.8 per cent in 2025 and by 3.2 per cent in 2026.
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In a separate assessment of the economy, employers’ group Ibec said it expected a more challenging global environment to translate into weaker growth in the second half of 2025 and 2026 “as changes in the global trade environment impact on trade and investment”.
“Despite an increasingly uncertain global environment, the Irish economy continues to show remarkable momentum and resilience, with all indicators pointing to strong current performance, albeit with some caution,” Gerard Brady, Ibec’s chief economist, said.
“Over the first three quarters of the year, domestic investment has broadly held up, consumer spending has grown at a steady pace, and employment has continued to expand.
“But we are starting to see early signs of softening in some labour market indicators, including our own member surveys which indicate slower hiring. We expect employment which has grown at a remarkable rate in recent years to slow below 2 per cent next year,” Mr Brady said.
“However, we remain in a vulnerable position because of the external factors. Whilst the public finances are in a strong position currently, they are also very vulnerable to a more volatile global environment.”
