The cost of building materials and disruption to supply chains will lead to 3,500 fewer houses being built in the next three years, the Central Bank has said.

In its quarterly bulletin, the Central Bank warned the impact of the current disruption to supply chains has led to higher construction costs.

"On the housing front, shortage or delayed delivery of raw materials, along with substantial rises in construction inputs costs, mean that new house completion forecasts are slightly lower than previously expected," it said.

The report notes the impact the war in Ukraine will have on metal used in construction machinery.

"The implications of the Russian invasion of Ukraine for raw materials generally is expected to weigh on machinery and equipment investment. Russia is an important supplier of certain metals," it stated.

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Ukraine is deemed to be a key part of the supply chain for certain capital products which will be impacted as long as the war continues.

"The war is likely to pose challenges in terms of the price and availability of such goods, which in turn dampens the extent of machinery and equipment investment," the report says.

Not all problems are linked to external issues. The report also highlighted "planning and procurement delays, labour supply" as well as "constraints and delays in connecting to public infrastructure" as blockages to housing construction.

Under Housing for All, the Government's blueprint for solving the housing crisis, a target of 300,000 homes is to be built between 2022-2030 was set.

When the Central Bank's revisions are factored in the plan will be 2,150 fewer than targeted by the end of 2025.

A memo brought to Government by Taoiseach Micheál Martin on Tuesday heard that Russia's war in Ukraine could impact the delivery of homes under the plan.

Cabinet heard the situation is being carefully monitored. A Government spokesman confirmed there will be constraints on supply chains and that the cost of materials is likely to rise.

The Government will also have to battle rising inflation and workforce shortages.

However, the spokesman added that it will only be listed as a "potential risk" in today's progress report. The Department of Housing will publish its Housing for All update today.

Housing Minister Darragh O'Brien said last month he expected the target for this year of delivering 24,600 public and private homes to be exceeded this year.

"I get the frustration but there is hope. The projections this year are good. We have a target this year of delivering 24,600 private and public homes and I expect us to hit and exceed that target," he said.

A Housing Department spokesman said that "of course there are serious concerns in relation to increased costs in construction and issues surrounding raw materials" and that the war in Ukraine had "exacerbated inflationary pressures" alongside rising fuel costs.