Dr. Conor O'Toole:

I completely agree with a couple of those points. It is very clear the composition of the supply gap matters. The bottom end of income distribution, internationally, is very clearly the area that always struggles with high housing cost. Ireland is no different in that regard. When we say we support the ramping up of supply, the supply that will be most impactful for that group is the expansion in social and affordable housing supply, either through local authorities or AHB activity. Whatever way that can be done as quickly as possible is the route to go. For those households, the cost of providing that supply to the supplier, be it an AHB or local authority, could be high. If rent were to be set based on that cost, it could be high. At present in Ireland we have the differential rent system so the household itself is exposed to that payment rather than the cost bit. There are pros and cons to that but, for the household specifically, that is a beneficial element and can reduce the housing cost substantially. We say to absolutely ramp up supply but, within that, there has to be a very large component of social and affordable housing supply. That is a very important element.

On the rental sector and rent price controls, we have a system of rent price stabilisation measures. The rent pressure zones are in place at present. There is a 2% cap that, in real terms, is less than the rate of inflation. Internationally, when you look at these measures, the reason evidence highlights the negative effects of these types of instrument is the studies in very many international contexts - there are hundreds of studies on rent controls internationally across countries, contexts and different jurisdictions - clearly indicate that sitting tenants are big beneficiaries of rent controls. Tenants looking to enter the market from outside it suffer due to supply contractions and drops in maintenance expenditure. Those are the pros and cons to these measures and the international evidence is quite voluminous around them. When we think about this type of approach, we need to understand there are pros and cons to making these policy choices in the long term. Notwithstanding how we regulate our prices in that market, the key issue is the supply gap at the lower end of income distribution.