Central Bank rules led to fewer houses being built

But they also made the economy more resilient...

Fresh research from the Central Bank has found that introducing its mortgage lending limitations created a decrease in investment in housing - and a reduction in housing stock.

It also concluded that lending restrictions would lead to lower household debt across the economy - which would also lower the default rate on bank loans.

Ireland's Central Bank introduced new lending rules in 2015 putting stiffer loan to value (LTV) and loan to income (LTI) requirements on borrowers, with additional restrictions for first-time buyers. These rules were relaxed in 2016.

"The main finding is that while the introduction of new measures could have some temporary contractionary effects in the short run, it leads to a significant reduction in leverage both in the short run and in the long run," the report concludes.

This made the economy, "more resilient" and less exposed to the effects of economic shocks.

Tighter lending rules are also believed to have resulted in an increase in consumption - while the long-term effects on GDP were negligible.