By Padraic Halpin
DUBLIN (Reuters) - Ireland established a new land development agency on Thursday, injecting it with 1.25 billion euros worth of capital to better use state lands to tackle a severe housing shortage that has begun to spark some street protests.
Despite being left with a surplus of houses after a 2008 property crash cut values in half, Ireland has been falling far short of the 35,000 new builds analysts say are needed annually just to keep up with demand from an economy and population growing faster than any other in the European Union.
Modelled on similar bodies in Germany and the Netherlands, the Land Development Agency (LDA) will be tasked with opening up land owned by local authorities, state departments, semi state bodies or in some cases the private sector to build 150,000 new homes over the next 20 years.
"We are acknowledging the reality that some of the sites that are causing this issue are in the ownership of public bodies," Finance Minister Paschal Donohoe told a news conference.
"The adoption of a more pro-active land management role by the state is critical to solving the current housing crisis and creating downward pressure on land prices."
While house building is increasing, just 8,000 new homes were completed in the first six months of 2018. The shortfall has increased homelessness, pushed rents above the "Celtic Tiger" economy peak of a decade ago and put rising house prices out of the reach of many prospective buyers.
Deputy Governor of Ireland's Central Bank, Ed Sibley, said on Wednesday that the housing market remained dysfunctional ten years after the financial crash.
The crisis has heaped political pressure on the government ahead of a possible election in 2019 and hundreds of mainly young people blocked off one of Dublin's major thoroughfares on Wednesday in the first major street protest over the issue.
Opposition politicians and housing activists have organised another protest outside parliament on Oct. 3.
Land for 3,000 units has already been secured from state bodies by the LDA, the government said, including, for example, by moving the country's central mental health facility out of a Dublin suburb more suited to the construction of houses.
"Ireland has a poor history of managing its land in a sustainable way. This has resulted in inefficient use, sprawl and volatile price cycles," Dermot O'Leary, chief economist at Goodbody Stockbrokers wrote in a note.
"While the impact from such an agency will not be felt immediately, it will be a welcome addition to the housing policy toolkit to aid in preventing some of the mistakes of the past."
(Reporting by Padraic Halpin; Editing by Toby Chopra)