The number of people on the property ladder is "not good enough", the Taoiseach admitted as he pledged to increase home ownership.
Leo Varadkar said the average person who can afford to buy a house is now aged "well into their 30s".
Around 71% of people in Ireland own their own home, but the Fine Gael leader said he wants to see that number increase.
It comes after Sinn Fein president Mary Lou McDonald criticised the housing system.
She said people living in the private rental sector face "unbearable" rent hikes.
Speaking in the Dail, she said: "For many people today, owing a home is but a pipe dream, for a whole generation home ownership is in real terms beyond reach.
"Not alone are houses unaffordable but rents are at such a level that nobody can put away a few quid to save for a deposit regardless.
"The housing system in this State is broken, but yet your response is you will stick with your plan even though it is failing spectacularly."
Mr Varadkar said rents are high and many people are forced to pay more in rent than a mortgage.
He added: "So 71% of people is not good enough for me and we want to see that rise and we are absolutely committed to doing everything we can to increase home ownership.
"People struggle to raise a deposit."
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Ms McDonald replied: "Leo fiddles while Rome burns.
"I am glad you have shared with us your deep commitment to home ownership.
"At least you recognise there is a crisis that home ownership, for a whole generation, is in real terms off the cards unless mammy and daddy can help you out with a deposit."
She asked Mr Varadkar to back Sinn Fein-proposed legislation which would prevent buy-to-let landlords from seeking vacant possessions.
Mr Varadkar said the proposal is not concrete action to resolving the housing crisis.
He said: "We did examine it and we met with the NGOs (non-government organisations) and the problem with what you're proposing is that it can't be retrospective and cannot apply to existing tenancies and it wouldn't help a single person who is currently renting, it wouldn't help someone who is facing homelessness."
