Wednesday 29 January 2020

Housing crisis will be the first major test for Leo

The OECD is urging caution and saying that the authorities should stand ready to tighten prudential regulations if needed. Photo: Stock Photo: Bloomberg News
The OECD is urging caution and saying that the authorities should stand ready to tighten prudential regulations if needed. Photo: Stock Photo: Bloomberg News
Editorial

Editorial

Is it a case of déjà vu all over again on house prices? With residential property prices up by 10.5pc in the first four months of this year, the OECD has repeated its warning of a property bubble.

In its latest economic outlook for Ireland, the Paris-based think tank foresees strong economic growth accompanied by a shortage of housing supply. It's predicting that gross domestic product (GDP) will grow by 3.7pc this year before dropping to 2.5pc next year and to more reasonable rates after that.

Economic growth and the drop in unemployment are very welcome but they come at a time of inadequate housing supply. These and other factors, such as wage growth, are leading to higher property prices. New figures from the Central Statistics Office show that prices are rising faster outside Dublin than in the capital.

The Government insists that its Rebuilding Ireland plan will go a long way towards solving the housing crisis. It is investing significant amounts of taxpayers' money to ensure this happens over the next few years.

But the OECD is urging caution and saying that the authorities should stand ready to tighten prudential regulations if needed.

It echoes comments from the Government's own advisers who have also warned about the risk of the economy overheating if too many houses are built too quickly. The Fiscal Advisory Council suggested that a surge in house building could inflate the economy.

Disagreements between experts are really academic for those struggling to get on to the housing ladder. For them, the promised new houses cannot come soon enough. They will look to Leo Varadkar's government to deliver.

Better college rankings come with a warning

Three Irish universities have improved their position in the latest world rankings. That's welcome news because, for all their faults, rankings matter. They are scrutinised by employers, potential research investors as well as staff and students both at home and abroad.

Before we get carried away and think that our higher education funding crisis has passed we would do well to consider the blunt statement issued by the president of UCD, our biggest university.

Professor Andrew Deeks disclosed that the main way UCD is paying for urgently needed new staff is from the fees income from non-EU students.

He warned that unless there is movement on the funding of Irish students soon, UCD will have to seriously consider reducing the number of places available to Irish students in order to preserve quality.

That possibility shouldn't worry those taking the Leaving this month but it should set alarm bells ringing in the Department of Education and in Government circles as a 'cap' could be imposed from next year.

It wouldn't just be UCD that would take such a drastic step, as other higher education institutions are also feeling the strain of a decade of cuts in government funding.

The funding issue has been kicked down the road for too long.

It's time for the Oireachtas Committee on Education, which is looking at how to fund the system, to make up its mind.

Irish Independent

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