A new report has found that national average house prices look set to rise by at least 10% in 2019.

The Friends First Economic Outlook report, published today, said that “there is still a significant shortage of owner-occupied housing, social housing and rental property”.

It cited a chronic lack of housing, among other factors, as a key risk that is creating a “serious vulnerability” to Ireland’s economy.

The report noted: “The crisis in the housing market continues to dominate the domestic political agenda.

“Against a background of limited supply and strong demand, house prices and private rents are rising strongly.

“While the momentum in the Irish economy is very strong at the moment, it is important for policy makers and all other stakeholders to pay proper attention to the challenges, threats and vulnerabilities and plan accordingly.

“In the run up to 2008, sufficient attention was not paid by policy makers to the inordinate dependence on the construction sector and when the external shock occurred, the economy was in a position of extreme vulnerability and suffered accordingly.

“The pressure on Ireland’s corporate tax system; the inordinate economic and financial dependence on a small number of very large companies; the damage that the housing situation is doing to competitiveness; and the impact that inflated measures of GDP are having on the fiscal parameters are key risks and challenges that will need to be monitored and managed very carefully.

“A proper risk assessment is required, and one which ignores political imperatives.”

The report later notes in its conclusion that “housing is undoubtedly the biggest economic and social issue confronting Irish policy makers at the moment”.

It adds: “Ireland has an owner-occupier and a rental crisis that is primarily due to demand exceeding supply.

“The simple solution is to identify and remove the barriers to delivering more housing, only then will equilibrium be achieved.

“Even if started now, this would take some time...

“A major issue for the economy in general and the construction sector in particular over the coming years will be a shortage of labour.

“Without adequate labour supply, housing needs will not be met.”

The report also found that while the proportion of weekly household spending on food, alcohol and clothing had fallen drastically from 1980 to 2016, the amount spent on housing had risen dramatically in the same period - from 7.2% to 19.6%.

It stated: “This highlights the fact that rising house prices and rents are soaking up more and more of household incomes, and of course this spending is concentrated in the age segment of the population between 30 and 50 years of age, which is also the age segment when the financial pressures exerted by children are also most intense.

“Housing is now a serious national challenge and threat.”