Dr. Kieran McQuinn:

There are a couple of issues. On the property market, last year, we did a detailed piece of work for the Department of Housing, Local Government and Heritage assessing the impact of Covid-19 on the property market. The issues we raised are pretty much those suggested by the Deputy. We felt Covid-19 would have a negative impact on demand for a period of time because of the uncertainty, job losses and so on and that it would more than likely have a bigger impact on supply over the longer term. Demand in the housing market can recover quickly. As alluded to earlier, there is a significant build-up of savings which, if they were to come on stream significantly into the property market, could result in a scenario of heightened levels of demand, with supply still being constrained. In terms of where we are at with regard to supply, we still managed to build 20,000 houses last year, which was a good performance given where we sought to be at the mid point of the year. However, we are still 13,000 to 14,000 houses short of what we need on a per annum basis. This year, the danger is that we could end up with a significantly lower level of construction such that the build could be in the region of 13,000 to 15,000 units. Our main conclusion was that the Covid-19 pandemic could exacerbate the imbalance between supply and demand in the market. That is a real genuine concern. Like everybody, we would like to see construction up and running, but there are public health considerations around that. The supply levels coming out of the construction sector this year will need to be carefully monitored. This goes back to our general point on the issue of public investment and the need for it, particularly in the housing area. It is one area where the Government can make a significant contribution in terms of trying to stimulate the supply side of the market. There is, however, the issue raised by the Deputy, namely, that if we do not have the labour, the danger is we will face higher costs.

On inflation generally, concerns have been expressed in regard to the United States, where there is a large debate about the nature of the stimulus package that the Biden Administration is bringing in and whether it will have inflationary implications. In the current climate, concerns about inflation are still somewhat misplaced. It is a concern that is a good way down the list in terms of the other issues and pressing considerations that are there. The CPI and the rate of inflation in the Irish economy over the past number of years has been running at less than 0.5% and there has been significant disinflation over the last six to nine months because of the crisis. I do not think we will see a significant build-up of inflation in general inflation in the coming months and years. I do not see that as being an issue right now, but I would caveat that there is a danger, particularly if the housing supply issue is impacted adversely, that we could see house prices build up sharply and rents start to pick up again. Those are two real concerns about the post-pandemic situation.