Central Bank Forecast: Housing & Economic Outlook
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The Central Bank has indicated that achieving the Government’s target of building 300,000 homes by 2030 will be “challenging.” This assessment comes alongside a modestly increased forecast for residential construction and a broader economic outlook predicting slower growth and continued inflation.
Housing Construction Forecast
The Central Bank anticipates the following levels of home construction:
- 2024: 33,000 homes
- 2025: 37,000 homes
- 2026: 40,500 homes
- 2028: 44,500 homes
However, the bank cautioned that ongoing bottlenecks in housing supply and persistently high construction costs could continue to drive up rents and housing-related inflation. This, in turn, could contribute to wage and price increases across the broader economy.
Economic Growth & Inflation
The latest economic forecast from the Central Bank projects slower growth for the Irish economy in the coming year, coupled with sustained inflation.
Growth projections
The bank forecasts:
- 2024: 4% economic growth
- 2026-2028: Average of 2.9% economic growth
This slowdown is attributed to a moderation in the rapid growth of employment and incomes that fueled consumer spending since 2021. The bank expects this moderation to translate into a slower pace of growth in modified domestic demand.
Employment & Unemployment
The strong employment growth experienced in recent years is also expected to ease. The Central Bank projects employment growth of less than 2%, with an average unemployment rate of 5% over the coming years.
Inflation Outlook
The bank anticipates average inflation of 2% between now and 2028.
Key Takeaways
- Achieving the 300,000 homes target by 2030 is considered “challenging.”
- Residential construction is expected to increase modestly, but supply constraints remain a concern.
- economic growth is projected to slow down in the coming years.
- Inflation is expected to remain around 2% on average.
- Employment growth will likely moderate, with a stable unemployment rate.
“Despite the notable challenges the Irish economy faces, it remains resilient and is expected to continue to grow, albeit at a slower pace.” – robert Kelly, Director of Statistics, Central Bank of Ireland
Looking Ahead
The Central Bank’s forecast highlights the complex interplay between housing supply, economic growth, and inflation. Addressing the challenges in the housing market will be crucial for sustaining economic stability and ensuring affordability for Irish citizens. Monitoring these trends closely will be essential for policymakers as they navigate the evolving economic landscape.