OECD: Long-term reforms needed to solve housing crisis
Long-term reforms in land use, taxation, and construction productivity are required as Ireland’s housing market continues to struggle with affordability and supply shortages, the OECD asserts.
The Organisation for Economic Co-operation and Development (OECD) states that while housing completions have increased in recent years, they remain significantly below what is required to meet demand, especially amid demographic challenges and long-term undersupply.
The report warns that “housing supply has not kept up with population growth”, and notes that the Government’s increase in annual housing targets from 33,000 to around 50,000 units “does not fully reflect total housing needs”.
It further criticises the use of local housing targets as ceilings rather than minimum requirements, arguing this practice risks constraining supply in urban centres already under pressure.
Housing for All implementation
Housing for All is recognised as a “comprehensive framework”, however, the OECD says quicker and more data-driven implementation is needed. In particular, digitalisation of planning processes and the development of a national land-use classification system are seen as critical to improve efficiency and transparency.
At the time of writing, it is unclear whether the Government intends to incorporate these recommendations into its successor strategy to Housing for All, which is due to be published in October 2025 but has been delayed multiple times since the new government took office in January 2025.
The report says that compact growth and higher housing density are essential to make better use of existing infrastructure and to curb urban sprawl. It identifies the new Planning and Development Act 2025 as an opportunity to accelerate progress, provided that planning and permitting systems are streamlined effectively.
Construction sector costs
High construction costs, particularly in apartment building, are flagged as a significant barrier to boosting supply. Productivity in the Irish construction sector is relatively low, and regulatory requirements around unit size and specification add to costs.
The OECD urges implementation of the recommendations from the 2023 Residential Construction Cost Study, including the wider adoption of standardised building methods and easing regulations around design specifications. International best practices, such as Germany’s Construction Cost Reduction Commission, are cited as models.
Private rental sector
The OECD asserts that the private rental sector faces high costs and low supply. It also warns that “complex rental regulation and policy uncertainty” can deter investment and recommends simplifying rules to provide greater certainty for landlords and developers.
Social housing provision is expanding but remains insufficient to meet needs. The OECD outlines that there is increasing dependence on housing allowances and the private rental sector, which raises long-term questions on fiscal sustainability.
The report advises reforming the funding model to shift more resources towards direct construction of social and affordable homes, and suggests examining alternative funding approaches used in Austria and Denmark.
Allocation processes across local authorities are also criticised for being overly complex and inconsistent. Streamlining these systems and prioritising people experiencing homelessness is seen as vital, given the continued rise in homelessness despite record levels of public spending.
