Bacon Three is "all in all, a bit of a damp squib," says Ken MacDonald, of Hooke and MacDonald auctioneers. "The Strategic Development Zones are quite long-term and will have no effect over the next two years. The other measures are not going to help supply, they are more geared towards reducing demand."

Bacon Three's recommendation that Strategic Development Zones (SDZs) be introduced under Part IX of the Planning and Development Bill 1999 has been widely welcomed. In these SDZs, the time-frame between the lodgement of the planning application and the start of construction will be significantly reduced; the downside is that they will not be fully operational for at least a year.

"The SDZs are a very good move, but it is a tragedy that it is so much on the long finger," says MacDonald. "It's a pity that there was so little consultation involved in the preparation of the latest Bacon Report. For example, people in the business could have told them that investors are not in competition with first-time buyers in the suburban market. They haven't been in competition for many years."

Stamp duty at the new flat rate of 9 per cent will be charged on all new and second-hand houses bought by investors.

Another measure is an annual anti-speculative property tax of 2 to 3 per cent of the declared value of properties which are non-primary residences. These moves to dissuade investors will have very serious consequences for the rental market, says MacDonald.

"They will stifle the supply of rented accommodation at a time when we are short of new rented stock."

The irony is that incentives introduced a year ago by the government to stimulate the rental accommodation market will be dealt a severe blow by this. Why would investors provide student accommodation if they are penalised by rates and stamp duty?"

"While measures have been introduced to boost supply, the net effect is going to reduce demand. In our experience, a number of developers are looking to switch from residential to commercial developments as a result. The supply of residential units is going to be cut as a result of the latest measures."

The commercial market can be less fraught with problems, says Ciaran Ryan, Director of the Irish Home Builders Association.

"No builder wants to build a block of apartments that in a number of years time they won't be able to sell. If building an office block is the best way to secure a return, then many will take that option."

"The site owned by the Cosgrave Property Group at George's Quay had planning permission for an office development when they bought it. They sought planning permission for a residential development and were turned down by An Bord Pleanala."

"They had the option to apply again but they could have been refused and the clock was ticking, so they decided to build with the existing planning permission because it was easier to get permission for offices rather than a block of apartments. "

Sean Dunne, Managing Director of Mountbrook Homes agrees. "Obviously not every site can or will switch to commercial units, but I have no doubt that in the next two to three years residential units in Dublin city centre will be in short supply."

The Bacon Report's agenda is more to stabilise the housing market than to look after first-time buyers, according to Martin Walsh, head of lending at EBS.

house prices have increased by more than 130 per cent since 1995 while house-building costs have increased by just 17 per cent.

"The problems in the housing market boil down to our inability to provide houses at reasonable prices for first-time buyers. Much of the action to date has been directed at managing demand, particularly at reducing demand from investors. These can only be seen as short-term measures." "Nothing can get away from the real problems of supply. There is no use suggesting that there is adequate zoned land for thousands of houses, if in effect this land cannot be brought into use for many years because of planning and infrastructure difficulties. The supply side is not being significantly addressed and the rental market is being knocked on the head."

The presentation of the Bacon Report tends to hide the seriousness of the Dublin situation by highlighting what is happening in the rest of the country, where the problems are not as serious, says planning and development consultant William K Nowlan.

"The problem is a Dublin problem. When the political tinsel is removed, the Bacon Report is basically saying that the Dublin housing situation is in crisis."