Kenny: construction sector needs 'progressive' stimulus

Enda Kenny said Ireland needs to revive its construction sector without causing a property bubble.

Responding to new data from the CSO showing that property prices in Dublin have risen 10% in the last year, the Taoiseach said the government will implement measures that allow prices to rise, but at a moderate level.

"What we need to do here is have a progressive and effective set of measures put in place to grow the construction sector … that will not create the bubble effect," he said.

Earlier today, Brian Hayes, the Junior Minister for Finance, said the rapid price increase in Dublin may be considered "bubble territory" but that some building work was necessary to ensure there was no shortage.

The Government's comments follow the publication of a report from Goodbody Stockbrokers, which claimed the property market had passed its low point, and increasing demand meant there would be a need for up to 26,000 new accommodation units in Dublin by 2021.

"I wouldn't say there's a bubble in the Dublin housing market, but I would be concerned about a 10% rise on an annual basis," said Dermot O'Leary, Chief Economist at Goodbody's.

He said that sustainable recovery in the market needed an increase in supply to prevent rapidly-increasing prices on an annual basis.