Figures show Irish economy outperforming all others in EU
Ireland looks set to continue to have the fastest growing economy in the EU next year.
However Government advisers have called for reforms such as a land tax to encourage house building and meet the demand for 25,000 new homes every year.
The Economic and Social Research Institute (ESRI) predicts the strong boost to homegrown and multinational businesses and services will even out at 6.7% this year before dipping back slightly to 4.8% in 2016.
Seven years after collapsing into national bankruptcy Ireland is outperforming every other country in the EU.
The latest estimates include predictions that unemployment will drop below 8% next year and Irish-owned businesses, classed as gross national product, will soar by 5.3% next year.
But the ESRI also used its quarterly economic commentary to push the Government on reform of tax and planning laws to kick-start house building.
Co-editor David Duffy said: “While the pace of economic growth has increased, we identify issues in the housing market and a potential significant downturn in global trade in 2016 as downside risks to our forecasts.”
The ESRI said a land tax which increases in line with house and land prices would act as an incentive to sell or use vacant plots when there is increasing demand.
Ciara Morley, who examined the housing issue, said: “This is something that could be looked at in greater detail in an Irish context.
“In any case, this review highlights the importance of understanding both supply and demand side features of the housing market before implementing any such policies.”
The ESRI said plans by the State’s bad-bank, the National Assets Management Agency, for the construction sector over the next five years would alleviate pressure on smaller construction firms.
Ms Morley said strict planning regulations, substantial infrastructural costs and inappropriate taxation appeared to play an important role in acting as a constraint on housing supply.
But she said there was some scope for reform to encourage new housing developments.