Trevor Sargent (Dublin North, Green Party)
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Question 79: To ask the Minister for Finance the measures his Department has taken to reduce the economy's exposure to the housing market; and if he will make a statement on the matter. [12417/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The housing sector has performed very strongly over recent years, with housing supply increasing in response to high levels of demand, which, in turn, have been underpinned by a range of fundamental demographic and economic factors. Total housing output for 2005 reached an all-time high of about 81,000 units. Construction employment growth was also particularly buoyant in 2005 and employment in this sector now accounts for one in eight jobs.

As acknowledged in the stability programme update published with the 2006 budget, the fact that the construction sector now accounts for a historically high share of economic activity and also employment implies that the economy is vulnerable to any shock affecting this sector.

In this context, I announced in budget 2006 that a range of property-related tax incentive schemes were to be discontinued, on foot of a comprehensive review of the schemes undertaken by independent consultants in the course of 2005. In line with the recommendations of the consultants, the 2006 Finance Bill provides that the tax schemes in question, several of which include a significant housing component, will be discontinued on a transitional basis, with full tax relief available for qualifying expenditure in 2006, and with decreasing levels of relief available in 2007 and in the period from January to end-July 2008, after which the relief will not be available. The gradual phasing-out of the tax relief schemes is designed to avoid any sudden shock to the construction sector generally, having regard to the important contribution of this sector to Irish economic growth at present. The credit policies of lending institutions also have an important role in ensuring the orderly evolution of the housing market, and in this regard the financial regulator continues to emphasise to lenders the importance of applying high credit assessment standards.