Dr. Conor O'Toole:

I will pick up on two points the Deputy made. The first relates to market exits from the rental sector and the supply in that sector. I will reference a piece of research we published earlier this year which looked at rent stabilisation measures generally in Ireland and internationally. By that I mean the rent pressure zone framework that is in place in Ireland. Looking across the international literature on these types of measures and other types of rent controls, one of the big side effects we see in general is supply withdrawing from markets where there are strict price caps. To come back to the previous argument around price caps, one of the reasons economists shy away from them is we have good evidence they can have these supply effects. Internationally, there have been circumstances where strict price caps and strict price controls in the rental sector can lead to withdrawal of supply or a degrading of housing stock in the rental sector. There are these distortionary effects. That is an important context when we think about how and when to intervene in these particular markets.

One other point that is important to make when we are more broadly discussing the general inflationary context and the high-inflation environment we now find ourselves in, even relative to earlier this year or last year, is that we have seen major inflation in construction cost inputs. Some of the series the CSO tracks from the wholesale price indices see some of the construction material inputs increasing by between 20% and 50%, whether it is steel or general materials. All of this challenges the provision of housing, be it for the rental sector or the owner-occupation sector. It is very difficult to unpick how we can get supply to increase in the short term, especially when we have been hit with these challenges. In general, when we are thinking about frameworks for regulating prices and their impact, the general effects of some of these price-cap measures can be quite detrimental to supply in an international context. I have not done any work on that in an Irish context, but internationally that is what some of the evidence suggests. In all contexts, it depends on the calibration, but in general that is what some of the evidence suggests.