IRELAND WILL HAVE to build 25,000 residential houses per year in order to cope with the housing crisis, but is nowhere near those levels, according to a leading think-tank.
The Economic and Social Research Institute (ESRI) also said that the housing crisis will continue for years to come, with strict planning regulations, high infrastructure costs and inappropriate taxation acting as constraints on supply.
The total number of houses built this year is expected to be around 12,000, with the ESRI suggesting that it will be years before the right targets are met.
However, the institute said that there is scope for government policy reform to encourage new building developments, with steps needed to be taken in order to ease the financial burden on smaller construction firms.
The authors of a paper on housing supply policies recommends that Ireland looks into adopting a land-tax, similar to one in Denmark, which rises in-line with the value of property or land. This would then act as an incentive to developers to sell undeveloped or vacant land in times of increased demand.
Growth
The ESRI also said that the economy is expected to grow by 4.8% in 2016, with unemployment expected to fall to as low as 8%.
However, the institute warned that the government might want to run a budget surplus soon and spend less than they take in, in order to take the heat out of the economy.
While growth looks good for the Irish economy, David Duffy of the ESRI warned that there were risks taken into account in their forecasts.
“While the pace of economic growth has increased, we identify issues in the housing market and a potential significant downturn in global trade in 2016 as downside risks to our forecasts,” he said.
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