---

Central Bank lowers home-building forecasts

The Central Bank has lowered its forecast for housing completions for this year, 2026, and 2027, warning that the final figures could be even lower than its projections.

The forecast came after the Dáil last night passed legislation to extend rent pressure zones (RPZs) across the country without a vote.

The bank’s latest quarterly bulletin forecasts that 32,500 new homes will be built this year, rising to 37,500 and 41,500 in 2026 and 2027, respectively.

In March, the forecasts for the three years had been 35,000, 40,000, and 44,000.

‘Downside risk’

Underpinning its forecasts, it said, was that home completions in the first quarter of this year had come in below expectations, while housing starts dropped sharply.

“The housing projections are subject to considerable downside risk, given current bottlenecks in housing supply and infrastructure,” the bank said.

“Increasing productivity in the construction sector is essential to enable it to fulfil the increasing demand for housing and related water, energy, transport, communications, and infrastructure,” it added, warning that these were affecting the economy’s capacity to grow and to protect Irish living standards.

Profits warning

The bulletin says that uncertainty about US trade policy and tariffs has shaped economic activity in Ireland so far this year, with ‘front-loading’ of activity by multi-national companies based in Ireland leading to “exceptionally strong” exports and growth figures in the first quarter.

It warns, however, that the longer-term expectations for these companies are “more negative than previously”, due to shifting US policy.

The Central Bank adds that lower profits for multi-nationals will affect corporation-tax receipts in the near- to medium-term, while wider changes in US tax and industrial policy could result in “a significant drag” on activity and employment in Ireland.

Growth forecasts lowered

The bank’s forecast for economic growth, as measured by modified domestic demand, this year has been lowered from 2.6% to 2%, with the 2026 forecast also lowered to 2.1%.

Inflation is forecast to average 1.9% this year, easing to 1.8% next year.

The bulletin warns the Government that the need to reduce the risks to the public finances from “an excessively narrow tax base” has become more immediate, due to the reliance on “vulnerable” corporation-tax receipts from a small number of large companies.

An article accompanying the bulletin warns that Ireland’s income-tax base is heavily reliant on high-earners, particularly those working for multi-national companies. It also points out that Ireland collected the lowest fraction of VAT in total revenue from all EU countries in 2022.