The ESRI has warned there will not be enough houses built to meet demand until the year 2018 at the earliest.

Its latest report predicts economic growth of around 5% this year, but has said there needs to be high level intervention in the housing shortage.

The new mortgage lending rules mean first time buyers need a 10 % deposit.

But the ESRI’s Kieran McQuinn has said the housing shortage could be eased if the Central Bank relaxes its lending rules: “What we’d suggest is that you identify a scale so for instance if you just take the loan to deposit ratios first.

“You could identify a scale between 75-90% and move the loan to deposit ratio up and down that scale on the basis of credit rating, house prices and supply and so if you felt that the market was in a somewhat contractory phase which we think it still is in terms of supply.

“Then obviously you could ease the loan to deposit regulation or requirement.”