Delivery of 40,000 new homes is required in 2023 to prevent further growth in the shortfall of housing supply, Initiative Ireland has claimed in a report.

The construction finance company estimated that 28,000 units were delivered in 2022, but that the shortfall in housing was allowed to increase by 16,000 or 36% regardless to approximately 116,000 or the equivalent of four years of housing supply.

The group said housing completions need to increase 40% this year to maintain the status quo and avoid the housing crisis deepening further. Lisney last week forecast that output would shrink in 2023 due to inflation in construction materials and labour.

In addition to the increase required this year, housing supply would need to rise to 48,000 in 2024 and 73,000 per year over the next five years for the shortfall in housing to be unwound.

The government-set housing target for 2023 is 29,000 units, with an annual average target of 33,000 for the rest of the decade.

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"In addition to measuring the supply of housing against new demand, it is essential we acknowledge the level cumulative shortfall which has built up in this country and the factors contributing to that shortfall," said Padraig Rushe, CEO of Initiative Ireland.

Initiative Ireland has urged "a radical overhaul" of the planning application process, to enable a 300% increase in approvals over the next half-decade.

Furthermore, the report forecasts 19% increases in the sales price of the average home for both first-time and subsequent buyers this year following the easing of the Central Bank lending rules.

The company has predicted the average sales price for first-time buyers will increase from €334,000 to €398,000, and for subsequent buyers from €391,000 to €466,000, with further increases of 0.6-2% projected in 2024.

The report also shows rent have increased two-thirds (65%) since 2015 and 11.7% year-on-year in 2022, with increases nationwide.