House prices could fall by 12% if the Government met its housing targets.
That’s according to new research from the Economic and Social Research Institute (ESRI).
In a report, released today, the Institute said prices could fall by 12% by the end of the decade if 35,000 homes a year were built.
To achieve it would require more public money, higher numbers of foreign construction workers and more domestic workers moving from commercial to residential projects, the ESRI said.
The ESRI estimates the Government will miss its annual housing targets by around 10,000 units a year to 2030.
That means it would complete around 25,000 new dwellings a year instead of a targeted 35,000.
Meeting the 35,000 a year target would take the heat out of the housing market while increasing construction wages by 1pc by the end of the decade, the ESRI found.
ESRI analysis shows overall investment in home building has not recovered since the financial crisis, and is less than half the size it was in 2000, as a proportion of overall construction.
Investment in “other building and construction” – which includes commercial real estate but excludes home improvements – is now back to Celtic Tiger levels.
That means the number of new workers required “may not be as great” if some are redeployed from the commercial sector, the report said.
The study found the movement of foreign construction workers into the country has been “minor” compared to sectors such as IT and manufacturing since the 2008 crash.
The ESRI is calling on the Government to consider adding construction to its “critical skills” list for visas, and says a better use of vacant properties, modular housing and land market reform could help boost completions.
It said more public funding is needed, as the growth of new bank lending for construction has slowed faster than other sectors.
The study comes at the same time as a slowdown in housing starts and in overall building activity.
Residential building activity fell 16.2pc between July and September, compared to the previous three months, while housing commencements have slowed by about 10,000 since the first three months of the year.
The Government is on track to beat its house building target this year but to miss it in 2023.