The cost of buying a new home here could drop by '€30,000 overnight' if tax changes were implemented.
That is according to Fergal O'Brien, IBEC Director of Lobbying and Influence, who was speaking as a new report finds housing challenges are directly impacting the economy as businesses can't fill positions.
The report warns that Ireland's competitiveness and attractiveness as a place to live are being harmed.
A recent CEO survey found that over 70% of companies identified the availability of housing for staff as a challenge to their business in 2023 - with 30% identifying it as a major challenge.
Mr O'Brien told Newstalk Breakfast the issue is now stopping firms from growing.
"Businesses have been saying to us for some time that it has been causing difficulties in terms of their own growth and expansion plans," he said.
"It has really moved to an unprecedented extent, to the degree to which it's actually stopping businesses from being able to fill positions, from being able to hire and expand.
"70% of IBEC members are now saying to us that housing is one of the key challenges in their ambition to grow their businesses.
"It's not just a real social problem, it is now a real economic problem".
'Bringing down costs'
Mr O'Brien said costs have to be lowered.
"We all know the problems that have been brought about by inflationary pressures, particularly in the last 18 months or so and the supply chain challenges," he said.
"We have to do something to bring down the cost of new housing immediately.
"We out a lot of tax on new homes, and we should not be taxing so severely that which we need more of.
"Typical a new home [of] €400,000 - we could actually reduce the cost of that by €30,000 overnight through a VAT refund to the homebuyer.
"Also by shifting some of the development levies that the new homeowners are now paying for the infrastructure in their local areas; that should actually be paid by the full population through the Property Tax, rather than by those who are already struggling to buy a new home," he added.
What can be done?
Mr O'Brien said the State has to play a bigger role when it comes to financing.
"We've a real problem right now in terms of financing construction of new homes," he said.
"Now because of ECB regulations, we're not going to have bank lending as the primary source of homebuilding finance, and that's fine.
"The State's going to have to play a bigger role - the State agencies, such as Home Building Finance Ireland, in terms of the Ireland Strategic Investment Fund.
"Also we have €150 billion sitting in Irish bank accounts, in savings, some of which could be put to use in the appropriate way to fund housing development and that shouldn't be beyond us," he added.
