Some 34,000 houses will have to be built each year for the next decade just to meet demand, Central Bank analysis suggests.

An economic letter on housing demand found that the new homes would be required assuming inward migration stays close to current levels. It shows that house-building in the State has been severely lagging demand for the past eight years.

According to the letter, by Thomas Conefrey and David Staunton, an average of 27,000 homes were required every year between 2011 and 2019, but official figures show that delivery of new homes has fallen far short of that.

Between 2009 and 2018, an average of just 10,500 homes were completed per year. In 2013 just 4,600 were built, while by 2018 that figure had risen to 18,000.

This year about 21,000 will be built, a level still viewed as “too low” and one that will contribute to “ongoing imbalances in Ireland’s residential property market”.

“Our analysis shows that in the period since 2011, growth in the population has significantly exceeded the increase in the housing stock, and the average household size has risen, reversing a previous long-running trend of falling household size,” wrote Mr Conefrey and Mr Staunton.

“In all scenarios we examine, estimated housing demand is higher than the number of new residential units completed over recent years, implying a need for continued expansion in housing supply over the medium-term.”

The Republic’s construction sector has endured heightened instability over the past number of years. According to the letter, expansion between 1998 and 2008 – when roughly 60,200 homes were completed every year – was unsustainable. The subsequent contraction was “severe”.

Inward migration

Between now and 2030, Mr Conefrey and Mr Staunton base their estimated 34,000 new homes on an assumption of net inward migration of 30,000 people a year.

Even a lower level of about 10,000 people a year would require the delivery of 26,500 new homes every year for the coming decade.

Population growth, which slowed substantially between 2007 and 2012, has returned to growth rates seen in the early 2000s.

The increase in the housing stock between 2011 and 2016 of just 8,800 contrasts with the population growth of almost 174,000.

The report analyses overall housing demand but does not address the composition of housing stock. It cites analysis by Trinity College Dublin economist Ronan Lyons pointing to the significant increase in the number of apartments in Ireland. Eurostat data shows that 8.3 per cent of the population lives in apartments, lower than the EU average of 41.9 per cent and the UK figure of 14.7 per cent.

“Recent observed levels of residential completions are well below both current and future estimated demand, implying a need for further expansion in the supply of new dwellings,” said Mr Conefrey and Mr Staunton.