Written answers

Thursday, 17 January 2013

Department of Finance

Property Taxation

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance his views on recent reports which predict further declines in property prices here; and his further views on whether the property tax will have a negative effect on property prices. [1788/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy may be referring to a recent report by Fitch Ratings, the ratings agency, which cited a likely further drop of 20 per cent in Irish house prices. This opinion is at odds with much of the recent indicators on the Irish housing market. Data from the CSO's Residential Property Price Index show that national prices have been broadly stable for the last nine months, with prices in Dublin experiencing upward price pressure in the latter part of 2012. Also, recent statements by both Daft.ie and myHome.ie have pointed to signs of stabilisation in the some areas in the fourth quarter of 2012. While I cannot presume to forecast the market I do not share Fitch's pessimism.

As to the possible effects of the Local Property Tax on residential property prices, work completed by researchers in the ESRI before the introduction of the tax concluded that a property tax at a rate of 0.4% would result in a small increase in the user cost of housing, thereby putting some downward pressure on housing demand. The Local Property Tax rate of 0.18% (for houses up to €1m in value) is less than half the rate used in the ESRI analysis and as such the impact on housing demand is likely to be minimal.

In addition, the rental market is a competitive market with many suppliers and renters. Upstream costs such as the Local Property Tax are likely to be passed through in the rental market and as such will not create a disincentive to purchase houses relative to renting.

Comments

No comments

Log in or join to post a public comment.