The State will have to spend more on housing in the coming years, the Taoiseach has said – but he warned that funding alone would not solve the problem.

As previously reported, the State will have to revise its housing targets upwards when the Central Statistics Office releases final figures on the population. Government figures frequently say the State is already spending €4.5bn on a multi-annual basis to fix the housing crisis, but this is the first time senior Government figures have said this will likely have to increase.

Speaking after a conference with housing stakeholders yesterday, Leo Varadkar conceded that the Government would likely have to spend more on housing in a bid to meet the newly revised targets, which are expected to be published early this year.

Mr Varadkar said he expected the Housing Commission to give advice on "whether we need to increase housing targets", adding: "I think given the rising population and given the fact that a large number of people have come from Ukraine, many of whom will stay, it makes sense to me that we will need to revise upwards those targets".

He said: "Just in relation to funding, the budget for housing, €4.5bn a year – it’s the biggest housing budget ever." He added: "Certainly in the years ahead, I would envisage the housing budget continuing to increase, so long as the economy is strong and the public finances can support it. Of course, we’re willing and want to spend more money resolving the housing crisis."

In Association with

However, he warned that funding alone would not solve the problem. He said: "We also need to be honest with people about that too. We’ve increased the budget. I think it’s more than doubled in a few years. When budgets increase very rapidly you can run into constraints as to how it can be spent."

He said there were limitations such as the availability of labour and the availability of materials such as timber, steel and concrete. "There are limitations in terms of getting things through the planning process. I don’t think the problem is going to be a lack of finance from the Government. I think it’s the other constraints that may hold us back more so than finance," he added.

Mr Varadkar also confirmed that the State is considering advance purchasing homes from developers to ensure housing targets are met. Currently, there are 70,000 homes, mainly apartments, in cities around Ireland that have planning permission but are not being built due to problems with viability. The Taoiseach said: "I think the key to getting commencements going again, is to turn that [unactivated planning permissions] around. There’s a number of reasons why it’s happening, partially because interest rates are going up. The cost of finance has gone up.

"There are also things we can do as well like advance purchasing homes and apartments, ones that wouldn’t otherwise get built. If we say to the builder that if you build it, we will buy it, or at least we will guarantee a certain price," he said.

The Taoiseach also confirmed that the State is facing a skills shortage in the construction sector. The State needs 50,000 additional construction workers to meet its housing and retrofitting targets. Housing Minister Darragh O’Brien also confirmed that he wanted to see the renters’ tax credit extended. Renters can now claim up to €1,000 of their rent this year as a result of the measure. On fixing the homelessness problem, some stakeholders encouraged the State to extend the eviction ban and to prioritise people in emergency accommodation for social housing, while others warned of the potential unintended consequences of these actions.

The Taoiseach indicated that there was some degree of unanimity on making the Housing Assistance Payment available to more people as one measure that could help with the homelessness crisis.