The following OECD assessment and recommendations summarise
Chapter 7 of the Economic Survey of Ireland 2006 published on 2
March 2006. The key domestic risk is the housing market. In the
past decade, house prices have risen faster than in any other
OECD country: average prices have roughly tripled in real terms.
Most of this increase is justified by the economic and
demographic driving forces such as surging incomes, a rising
population and changing living habits, with an additional fillip
from low interest rates, but prices may have overshot to some
extent. However, this does not imply that they will fall
significantly: the housing market is not symmetric, and during a
downswing people prefer to take their house off the market
rather than sell at a loss. Thus, the most likely scenario is
that prices will level out or decline slightly, housing
construction will fall back gradually, turnover will decline and
the market will remain subdued for some time. But even in such a
scenario, government receipts would w