LAST UPDATE | 19 Jun

THE CENTRAL BANK has revised down its forecast for how many new houses it expects to be completed in the coming years.

In its new quarterly bulletin on the state of the economy, the Central Bank said it forecasts housing completions will hit approximately 32,500 this year, 37,500 next year, and 41,500 in 2027.

Despite the downward forecast, Taoiseach Micheál Martin said today it remains the government’s ambition to deliver 300,000 homes over the government’s five year term. 

However, Housing Minister James Browne admitted today that hitting the new homes target of 41,000 is now “not realistic”. 

The numbers contained in the Central Bank’s last forecast in March said it expected housing completions of 35,000, 40,000 and 44,000 in the three years. 

The reason for the downward revision is that housing completions came in below expectation for the first three months of 2025, while commencements of new housing also dropped sharply.

The bank cautioned that the housing projections are subject to “considerable downside risk” because of current bottlenecks in housing supply and infrastructure. 

It added that increasing productivity in the construction sector will be essential to enable it to fulfil the increasing demand for housing, as well as associated water, energy, transport, communications and infrastructure. 

When asked about the figures on RTÉ’s Morning Ireland this morning, the housing minister said the government has to “turn the ship around”. 

“I’m going to deliver homes for people, and that’s why I’m making some very bold decisions, very tough decisions. But we have to get that step change if we want to go up to those 50,000, 60,000 homes, so people have the homes that they need to live in the communities where they want to live.”

Previously, the housing minister admitted that meeting the 2025 target would be “extremely challenging” and all predictions are trending around 34,000.

“I think the challenge we have this year is we’re coming off a much lower base from last year than was expected,” he said of the housing targets. We had hoped for much higher figures last year,” he added. 

Last week, Browne announced a new set of measures aimed at alleviating the pressure placed on renters.

Among them was an extension of the rent pressure zones to cover the entire country and new six-year period tenancy agreements, kicking in next March, where landlords are unable to reset the rents for a property within that time period. 

He said the only way to get rents down is to increase housing supply. 

“If we leave the system as it is right now, we are not going to get that supply, and that’s why we’re changing the rent control by bringing in a national rent control, doubling down on renters protections, but also making certain measures so that we can start to get the investment into the country, that we can get that supply moving.”

“These decisions are difficult. We could have left it alone, but we would have affected future supply. We need more supply,” he said.

Social Democrats TD Rory Hearne called the policy “exasperating”. 

“It is so frustrating that they’re putting this argument. Renters are going to pay the price for, at some point in the future, a supply of housing that will bring down rents,” he told Morning Ireland.

“They haven’t answered the question, when will rents fall on the basis of this policy, and what institutional investors are going to build housing that is at a lower rent than what they’re currently charging? It’s not logical.”

Speaking in the Dáíl during Leaders’ Questions, Sinn Féin’s David Cullinane said the “proposal to effectively remove rent controls from new tenancies signals disaster for renters, young people, students and their families and anyone who moves to a new rental home”.

He said the move will be “painful for tenants” and is a “greenlight for massive rent increases every year”.

“You can’t promise vulture funds that you can increase prices while pretending to renters that rent will not go up,” said Cullinane.

“We know who is going to pay and it is renters.”

He noted that the Central Bank has again revised down their estimates for new home completions this year and that targets are likely to be missed next year too. 

“There’s one absolute certainty, that rents will go up and that you will remove one of the few protections that renters have,” said Cullinane.

He added that families will be “locked into overcrowded accommodation for fear that if they move, their rents will skyrocket”. 

While he said the rent pressure shown zone should be extended, he called for the rest of the “crazy” proposals to be “scrapped”. 

He also said the students who live off-campus stand to be one of the “first to be affected”.

Responding on behalf of the government, Tánaiste Simon Harris said the government will be “taking specific measures to support students” and that he “has their backs”.

He added that it is Sinn Féin’s policy to “abolish rent pressure zones in favour of reference rents”.

Harris said reference rents have been described by the ESRI and the Housing Agency as “unworkable and complex”.

However, Cullinane claimed that Harris’s remarks were all “spin and bluster” and that many students will see their rents increase. 

Economy

The Central Bank’s report also paints a picture of how the Irish economy is faring.

Domestic economic activity was broadly steady for the first three months of the year.

Economic activity grew by 1% in the first quarter 2025 compared to the same quarter in 2024. Employment grew by 3.3% and unemployment stayed low at 4.3%.

There was a sharp rise in pharmaceutical exports to the US that drove an increase in headline GDP. 

Merchandise exports surged in the first three months of 2025, up 64% year-on-year, which was “entirely driven” by exports to the US. 

Trading partners in the US and Ireland may have been trying to squeeze in as much business as possible before the tariffs threatened by US President Donald Trump could hinder their operations.

The Central Bank’s director of economics and statistics Robert Kelly said that “with the global economic backdrop continuing to shift, there is heightened uncertainty on the outlook for the Irish economy”.

“As a small, open economy with significant trading and investment relationships with the US and EU, Ireland is experiencing the fallout from changing geoeconomic relationships and priorities,” Kelly said.

He said that “policy uncertainty, in particular related to significant shifts in US trade policy, has directly shaped headline economic activity in Ireland so far in 2025″.

“The exceptionally strong exports and GDP outturn in the first quarter in part reflected the response of multinational enterprises (MNEs) to the prospects for the imposition of tariffs or other measures later in the year,” he said.

“Despite this front-loading of activity, which was most notable in the pharmaceuticals sector, longer-term market expectations for the profitability of MNEs across pharma, med-tech and ICT manufacturing operating in Ireland are more negative than previously in light of the shifting US policy stance.”