* Second Irish housebuilder to float since economic crash
* Glenveagh to buy development land acquired by Oaktree
* Ireland struggling with chronic shortage of housing (Adds details, quotes)
DUBLIN, Oct 2 (Reuters) - Glenveagh Properties plans to raise up to 550 million euros ($646 million) in Ireland's second largest initial public offering since the 2008 financial crisis to add much needed housing supply to Europe's fastest growing economy.
While Ireland was left with a surplus of houses after values were cut in half following the property crash a decade ago, a recovery in the construction sector has badly lagged the general economy, causing house prices and rents to rise sharply again.
Glenveagh will become just the second Irish housebuilder to float since the economy began to turn around, following Cairn Homes in 2015. Cairn's share price has almost doubled since then as the value of its portfolio grew sharply.
Glenveagh's IPO will also beat the 385 million euros Cairn raised and be the second largest on the Irish stock exchange, behind the 3.4 billion euros raised by Allied Irish Banks in June.
"One of the structural weaknesses in the housing market in Ireland is the fragmented nature of the housebuilding sector and its lack of scale," Glenveagh co-founder and chairman John Mulcahy, a former senior executive at Ireland's state-run bad bank NAMA, said in a statement.
"We believe there is an opportunity through publicly quoted companies like Glenveagh."
Glenveagh, which will combine development land acquired in Ireland by U.S. private equity firm Oaktree with the assets of Irish builder Bridgedale, has some 1,700 units ready for construction and plans to build at least 1,000 new homes a year by 2020, with 2,000 more a year to follow on a long-term basis.
Glenveagh will focus on building in and around Dublin, where supply is particularly tight, and has committed one-third of the IPO proceeds to 27 sites it has agreed to buy.
Economists estimate that 35,000 new homes are needed a year to address the shortage in Ireland and keep up with demand in a country that also has the EU's fastest growing population.
However a report by Goodbody Stockbrokers' on Monday suggested just over 5,000 houses were completed last year, a third of the official completions data that the government has acknowledged may overstate the true level of homebuilding.
Conditional trading on the Irish and London Stock Exchange is expected to begin on October 10.
Credit Suisse and Ireland's Davy have been appointed as joint global coordinators. ($1 0.8513 euros) (Reporting by Padraic Halpin; editing by Jason Neely/Keith Weir)