A Department of Finance report has warned that the building sector must be closely monitored to prevent another housing boom.

The report published today concludes that a "strong supply response" is fundamental to tackling the housing crisis.

But it says developments in the private sector require careful oversight to pre-empt the risk of a construction-led housing boom.

This warning was made in a review of the Government's Capital Plan that runs until 2021.

The progress report sets out priority areas as Government decides how it will spend the extra €4.1 billion it has available for the likes of roads, public transport, hospitals and schools.

The study also found that traffic congestion around urban areas is posing major problems and parts of the road network are almost at the point of breakdown.

It says there is a clear requirement for additional investment in public transport.

Earlier, the department said the Government will publish a new ten year National Investment Plan by the end of this year.

This may include projects that are supported by the European Investment Bank, which the department says it is currently exploring.

It will also include the results of an ongoing review in the future of Public-Private Partnerships.

In a review of the Government's current Capital Plan, the department said the amount it has allocated to capital investment had risen considerably since 2015.

At that time the Capital Plan, which is to run until 2021, was to involve €20.9 billion worth of spending. However this has been supplemented by a further €6 billion.

The department said the new National Investment Plan will build further on this, running from next year until 2027.

The Government will also hold a "consultative forum" in the coming months, which will give stakeholders an opportunity to discuss and comment on its recent capital spending.

Finance said it was a priority to have the next National Investment Plan align with the National Planning Framework 2040, which is also set to be published before the end of the year. 

It will also take into account the IMF’s assessment into public investment management, and will include proposals for the reform of the rules around planning, selection and delivery of projects.