The Irish government has launched a $550m fund intended to finance the construction of 11,000 new homes.
Sixty-five per cent of the money will be provided by the Irish government’s Strategic Investment Fund and the remainder by US private equity company Kohlberg Kravis and Roberts (KKR).
It will be loaned at commercial rates to house builders who want to construct large-scale schemes, and will provide up to 90% of the total investment.
The scheme, which is called Activate Capital, is deemed necessary because Irish banks are reluctant to provide more than 70% of the total finance required for projects.
Works funded by initiative are expected to create an average of 1,900 full-time jobs a year.
Michael Noonan, the Fine Gael minister for finance, said: "Today’s launch of the joint venture between the Ireland Strategic Investment Fund and KKR Credit is good news for jobs, growth, potential house purchasers, and the construction sector.Â
"Activate Capital will be an important source of funding for increasing the supply of medium to large housing developments. It will invest in the development and construction of housing, with €500 million of financing, which will assist in normalising the sector and addressing the housing shortfall."
The Irish housing market was one of the hardest hit by the 2008 crash, however since then demand has revived and shortages have emerged in the Dublin area.
Some 93,000 houses were built in 2006 at the height of a market, but that fell to 9,500 over the past four years.