A new report has identified “misalignments” in the Irish property market with a mismatch between housing supply and household formation resulting in price increases.

The document providing an annual snapshot of potential risks facing Ireland, ‘National Risk Assessment 2015 - Overview of Strategic Risks’, was published by the Government on Thursday.

It stated low levels of housing supply was an “immediate issue of concern” leading to higher rents, increased pressure on social housing and increased homelessness.

“It is clear that the supply of new housing, both for ownership and rental purposes, remains well behind where projected demand suggests it should be.”

The report stated that housing supply has not kept up with the growth in household formation.

“This mismatch between housing supply and household formation has resulted in price increases.”

These rising prices reduced the affordability of accommodation, negatively affected individuals’ mobility and harmed national economic competitiveness.

“Rising prices make home ownership more difficult but they may also drive up rents as well as increase homelessness.

“An important side effect is that a lack of housing and associated high prices and rental costs could affect Ireland’s attractiveness for inward investments and skilled immigrants.”

The report also identified as “a particular area of concern” the increase in the number of long-term mortgage arrears cases, with accounts in arrears greater than 720 days continuing to rise.

This year’s report identified a new risk “relating to social expectations of greater public expenditure”.

It cautioned that as the economy recovered, there may be a public expectation that restraints on social and other government expenditures could be released and efficiency measures reversed in the short-term.

The report noted that recent analysis from the National Competitiveness Council (NCC) found Ireland’s continuing competitiveness “is under threat” and pressures were emerging to undermine Ireland’s international ability to compete.

Turning to the banking system and private debt sustainability, the report said the level of non-performing loans remained high at the end of 2014.

Ireland’s household debt is the second highest in the euro area, below only the Netherlands, the report stated. About a quarter of loans to small and medium-sized enterprises (SME) were in default.

The report warned a fundamental change to the role of the UK in the European Union, or a period of continuing uncertainty regarding the UK’s relationship with the EU, could present significant challenges for Ireland.