Minister’s Brief

changes in the relevant tax base) and the distribution of Irish household wealth and its
implications in terms of a hypothetical wealth tax. Staff from the Unit will work jointly
with ESRI researchers on a number of these topics
The section is also preparing a review of behavioural economics concepts and their
possible application to the Irish tax system. The implications of behavioural
economics, i.e. the integration of economics and the psychology of preference
formation and choice, has yet to be systematically explored in Irish tax policy. The
purpose of the work is to familiarise policymakers and tax specialists with behavioural
concepts relevant for tax design and to provide alternative ways of approaching
design.
Housing market/construction sector analysis
Recent developments
National residential property prices increased by 6.6 per cent in the 12 months to
December 2015. Recent moderation in prices in Dublin has contributed to a slowdown in
the growth of national residential prices. Prices in Dublin are up 2.6 per cent on an annual
basis to the end of December. Outside of Dublin, prices rose by 10.2 per cent.
Standard indicators (e.g. ratios of prices to incomes or rents) or regression based
estimates do not suggest that house prices are overvalued.
The number of housing completions was 12,666 units for 2015, 15 per cent more than in
2014. However, medium-term demand is projected to be 20-25,000 per annum.
Mortgage lending continues to recover. The value of mortgages drawn down for purchase
in the year to Q4 2015 (€4.9billion) was up 26.2 per cent in the year to Q4 2014. In the
medium term, analysts suggest a sustainable level of mortgage lending should be
c.€8billion per annum.
The most recent data from the PRTB shows that the annual rate of growth in rents outside
of Dublin (8.5 per cent) has begun to align with the pace of growth in Dublin (8.7 per
cent). The rental market is under significant pressure. Daft.ie figures indicates that were
just 3,600 homes available to rent nationally on February 1st, the lowest total since the
series started in 2006.
The rise in rents is contributing to the increased risk of homelessness. 3,625 adult
individuals used State-funded emergency accommodation nationally during a week in
December 2015. The issue of family homelessness is more acute in the Dublin region.
Government policy initiatives
The previous Government introduced a number of packages to address issues in the
construction and property sector including Construction 2020, the Social Housing Strategy,
and, more recently, the Stabilising Rents and Boosting Supply Package. This Department
contributed to the formulation of these packages and, in some cases, implementation of
agreed policy measures (for example, under Construction 2020, this Department set up
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