His comments come after the Central Bank’s warning that the government needs to put buffers in place if Ireland is to avoid another boom-bust cycle.
Mark Cassidy, director of economics and statistics of Central Bank, said the continued growth, which is broadly balanced between domestic and export activity, is to be welcomed, but he warned that there is a risk now of “overheating”. He said the strength of the economic growth means the economy risks “hitting full capacity” which gives rise to the risk of “boom-bust cycles”.
“This underscores the importance of building fiscal buffers during the good times,” he said. Cassidy said it is important now that the government avoids any policies that would add to this risk.
When asked if he believed there was another property or land bubble taking hold, Varadkar said:
“On land bubble, I don’t. But I do think there is a lot of land that isn’t being made available for development quickly enough and that is why we brought in the derelict site levy for example.”
The Taoiseach said the vacant site tax will make sure there is more land available for housing construction, while the setting up of the land development agency, which will have Compulsory Purchase Powers to acquire land and develop it, will also help.
Varadkar said there is “still not enough” houses being built to stem demand, adding that the government plan to get more involved in the housing market in the months ahead in order to deliver on its targets.
“This year, we anticipate 20,000 new homes being built. That’s still not enough. So we need more interventions and this will be part of that, the Government getting much more involved in developing land for housing.”
While he said house-builds are increasing, it is “far short” of where Ireland needs to be. Other indicators are also not going in the right direction, he admitted.
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