A recovery in the housing sector to meet new and pent-up demand risks undermining the public finances if not managed properly, the Fiscal Advisory Council has warned.
The chairman of the State's budget watchdog Seamus Coffey said housing construction rates are so low we are building up problems, but output could ramp up quickly from both the public and private sectors, creating its own problems.
"We'd like to see housing output increase," he told TDs and senators on the Oireachtas Budgetary Oversight Committee yesterday.
House building is "tax rich" but income from a catch-up in housing construction should be regarded as transient and should not be used to fund increased public spending or tax cuts, he said.
High government debt means "we're not in as strong a fiscal position to deal with Brexit as we might have been", he noted.
The Fiscal Advisory Council favours using tax windfalls to cut the national debt.
"Ireland's history over the past 30-40 years is of using fiscal resources when they are not needed and not having them when needed," he said.
The Fiscal Council's Michael Tutty said he was in favour of the plan to cut the national debt to 45pc of GDP, which has been ditched by Taoiseach Leo Varadkar who favours using available funds for infrastructure investment.
"There is a need for infrastructure, but do we need to borrow more or change priorities?" Mr Tutty asked.
Property & Mortgages
The housing market is getting more confused than ever. Luminaries such as the Irish Fiscal Advisory Council (FAC), the OECD and outgoing finance minister Michael Noonan all waded in on the debate this week about whether there is a bubble.
Property & Mortgages
New policies are needed to return Ireland's housing market to a normal state. Cycles are par for the course for housing markets around the world, but Ireland's experience over the last 20 years stands out in particular. Following one of the biggest booms in international history in the 2000s, the biggest bust then ensued. Since 2013, prices have grown strongly, and having accelerated recently, talk is now widespread of a housing boom once again. Given this rollercoaster ride, one could be forgiven for believing that "normal" is an elusive state for the Irish housing market.