The IMF said Ireland needs to do more to address the country's housing crisis, recommending that the Government release more land for development, streamline the approval process, incentivise the construction of rental properties, and increasing the supply of social housing.
In its latest review of the Irish economy, the IMF said the Government’s current efforts are welcome, but reducing the shortages in affordable housing requires a multi-pronged approach.
In a review published yesterday, the international body said sustained growth after the pandemic will require more investment to alleviate the housing shortage.
Reports published this week highlight a chronic shortage of properties that have resulted in soaring rental prices. According to Daft.ie rental price report, rental prices outside Dublin were 7.1% higher in the first quarter of 2021 than in the same period last year, costing tenants an extra €900 per year.
The annual IMF mission took place over a two-week period that ended on May 7, during which a team of economists assessed Ireland’s economic and financial developments and discussed the country's economic policies with a range of individuals and state bodies including Finance Minister Paschal Donohoe, Public Expenditure Minister Michael McGrath, the governor of the Central Bank, and officials from government departments and agencies.
However, the IMF warned against a premature withdrawal of supports and said they should instead, be tapered and removed gradually to avoid cliff-edge effects.
"Income support measures should become increasingly conditional on re-skilling and further shift toward subsidising new hiring in the expanding sectors.
"Business support measures should also be increasingly targeted to affected but viable firms," the review states.
The IMF, led by Khaled Sakr said that eventually, Ireland's tax base will need to be broadened to help finance productivity-enhancing investment in human and physical capital.
In response to the review, Mir Donohoe said the Government will continue to support households and firms but that these supports will evolve as the situation progresses. "They will be more tailored and more targeted to those workers most in need and to viable, but vulnerable, firms."