Davy says 85,000 homes a year are needed, as population set to boom

Housing output is anticipated to reach 36,000 completions this year, rising to more than 40,000 next year.

However the forecasters believe this is well short of its estimate of underlying housing need.

It said inflation could rise if an expansionary budget is presented later this year

Just under 85,000 units a year will be needed until 2030 to close the existing shortfall, according to the analysis. This is 2.6 times the level of completions recorded last year.

Davy believes there is resilience in the Irish economy, supported by foreign direct investment, ongoing high-skilled job creation and a rising population,

It expects growth of 4.5pc this year, as well as economic growth of 4.3pc next year. This is up from an estimated 3pc last year.

It expects lower inflation – of close to 2pc – to contribute to a rise in consumer spending. Employment is expected to grow by 2pc a year, an increase which is likely to be supported by foreign direct investment.

Today’s News in 90 Seconds – June 19th

Davy expects the population to reach 5.9 million by 2030, around 10pc ahead of the National Planning Framework’s baseline.

It added that the forecast, which reaches 6 million almost a decade faster than the NPF’s high migration scenario, is set to have a further impact on soaring demand for housing as well as other infrastructure needs.

Residential property prices are set to jump 7.5pc this year.

Davy attributed this potential rise in housing prices to a “limited increase” in transactions.

Budget surpluses are expected to be about 2pc of national income this year and next year, according to the forecast.

However, Davy pointed to the impact of “buoyant activity levels” in the Irish economy on national infrastructure. It called for an increase in capital spending on housing and decarbonisation.

Investment of around €30bn is required to meet government targets of 5GW offshore and 11GW of onshore wind and solar capacity by 2030.

Davy also noted threats to the country’s competitiveness, which must be tackled to avoid a reduction in job creation or a slowdown in foreign direct investment.

It also warned that inflation could rise again if another expansionary budget is presented later this year.

It added that Ireland’s share of debt maturing within five years is currently the lowest in Europe.