House prices could fall by 12% if more homes built – ESRI

A new paper from the Economic and Social Research Institute (ESRI) suggests that if housing output increases by 10,000 units annually, house prices could decrease by as much as 12%. 

The study also discovered that rising output would not necessarily result in notable wage inflation in the construction industry.

The government should include construction trades like carpentry and plumbing on the State’s critical skills list, according to the paper by ESRI researchers Paul Egan, Eoin Kenny, and Kieran McQuinn, which examines the economic effects of increasing future housing supply. Doing so would make it simpler for skilled workers from outside the European Union to obtain visas to work here.

It also raised doubts about Ireland’s financial system’s ability to supply the credit required to meet the demand for residential real estate.

The paper issues a warning that the domestic banking sector may find it difficult to increase lending to the construction sector sufficiently to meet housing demand.

The “highly litigious” nature of the Irish real estate market, according to the researchers, could thwart any efforts to give the Land Development Agency the authority to purchase private land for housing.

Additionally, they claim that lending to the construction industry is still restricted by the bad debt leftover from the previous real estate crash.

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