The Government should consider a levy on second homes and review all tax incentives for property investment to address problems in the housing market, according to the latest report on housing performance and policy.
According to the report, a tax on second homes could fund the higher costs of infrastructure, and the provision of an extra 73,000 social housing units over the next 8 years.
The recommendations are contained in the National Economic and Social Council's (NESC) report Housing in Ireland: Performance and Policypublished today.
Among its many recommendations are a review of designated area tax reliefs which are due to expire in 2006 and a tax or loan instrument to aid acquisition of deposits for owner occupier housing.
It also recommends the retention of mortgage interest tax relief (MITRs) for owner occupiers and landlords and the retention of tax relief for tenants.
And while stamp duty should also be retained. the NESC proposes such as providing incentives to trade down and increase bands or thresholds.
The report found an unmet need for social housing while the current level of housing output is "above the level of long-term private housing demand".
Following its analysis of the housing market in the past decade and a half, the NESC recommends bringing the number of permanent units in the State's social housing stock to 200,000 by 2012. This increase is "in a manner that is consistent with other public investment needs and sound public finances." it stated.
As regards private housing, today's report found that "despite its dynamism, the private market for owner occupied housing has not met the housing needs of many and the market for private rental accommodation has displayed rent levels that are not affordable for some households, the report found.
It added that rapidly rising property prices have been a independent source of significant change in the distribution of wealth and income in society.
The report outlines concerns about the sustainability of the housing system stating "a strong case can be made that the patterns of settlement, neighbourhood design and density in the past decade are storing up significant social, environmental, budgetary and economic problems in years to come."
The NESC is under the aegis of the department of the Taoiseach and its main tasks are to analyse and report to the Irish Government on strategic issues relating to the efficient development of the economy and the achievement of social justice.