A tax on second homes could hit up to 200,000 properties in the State, according to industry estimates. While neither the Department of the Environment nor the Central Statistics Office keeps figures on the number of investment properties or holiday homes in the State, industry figures indicate that they account for more than 15 per cent of the housing stock.

In addition, the proportion of homes being purchased for investment is rising to about 20 per cent this year from 8 per cent four years ago. According to the CSO, more than 140,000, or 10 per cent, of dwellings in the State in 2002 were in the private rented sector while 461,000, or 36 per cent, were owner-occupied without a loan or mortgage.

Industry sources questioned whether a tax would help dampen inflation in the property market. "Even if you stopped all holiday homes you are not going to help first-time buyers. They don't want to live in Connemara. They want to live in urban areas," one source said.