Bank seeks to prevent future market bubbles

A capital gains tax on the proceeds of house sales and the introduction of real estate investment trusts (REITs) are two of the levers available in the future to prevent a property bubble from forming, according to a research paper issued by the Central Bank.

The Central Bank studied the Irish housing market between 1980 and the 2012 and looked at the relationship between home ownership and renting. The researchers examined the cost of owning a home compared with renting.

Between 2002 and 2007 there was a strong incentive towards home ownership because of house price appreciation and fiscal incentives such as mortgage interest relief. However, since 2008, that trend has been reversed and it is now more attractive to rent than buy.