OECD: Housing in Ireland needs to become more affordable

Addressing housing affordability challenges requires reforms to strengthen the supply response to rising demand, the OECD has asserted.

In its 2025 Economic Survey of Ireland, the OECD states that policies to increase housing density, improve land use and planning, and boost productivity and lower costs in the construction sector are needed for a well-functioning housing market.

“Ensuring adequate supply and funding for social housing would ameliorate living conditions for the most vulnerable, and help combat homelessness,” the report says.

In the context of the lack of consistency in the fiscal and regulatory framework, the OECD asserts that repeated large-scale changes reduce investment certainty and may deter private investment. It recommends that all housing-related policy, legislative, and regulatory proposals undergo rigorous regulatory impact assessments.

Greater standardisation and coordination among data-collecting bodies is also advised to improve the quality and consistency of housing data. “Housing targets should be regularly updated to reflect actual and pent-up demand, and better aligned with local conditions, particularly in urban areas,” the OECD states.

The report calls for the abolition of temporary tax measures introduced in recent budgets, such as mortgage interest relief and incentives for landlords and tenants as property tax revenues remain “modest”. The OECD recommends increasing local property tax rates and taxes on residential zoned land. It also advises tightening the tax treatment of secondary homes, capping the capital gains exemption on primary residences, and abolishing stamp duties.

Following the passage of the Planning and Development Act, the OECD highlights the need for improved digital infrastructure and recommends accelerating the national rollout of e-planning. Enhancements to the An Coimisiún Pleanála data collection and case management systems are also advised. To address recruitment and retention challenges in planning offices, tailored training should be expanded.

New planning guidelines on residential density should be enforced through monitoring of exemptions and by making adherence to density targets a condition for public financial support. The OECD identifies the Town Centre First scheme as a potential model for sustainable land development and recommends the creation of a public data portal and toolkit. A national land-use classification system and land-use map are also recommended, alongside lower development charges on brownfield projects and a map of available sites.

In the rental market, the OECD recommends applying rent controls only within contracts and avoiding regulations that lead to unfair terminations. It also advises consolidating the Residential Tenancies Act.

To address high construction costs and low productivity, it recommends continuing cost audits and implementing the 2023 Residential Construction Cost Study, including greater use of standardisation. Publicly supported housing, it claims, “could reduce costs through simplified specifications and adjusted price caps”.

Finally, the OECD calls for reduced reliance on the private rental sector and increased social and cost rental housing. It recommends streamlining allocation processes and prioritising individuals experiencing homelessness. Multi year, cross-departmental funding is advised for homelessness support schemes.