The Minister for Finance Brian Cowen said this afternoon he believed a series of interest rate rises by the European Central Bank were beginning to put the brakes on house prices.
"My information is that there has been a softening of prices in recent months and that's to be welcomed," Mr Cowen said, adding he believed Ireland's property market was "heading for a soft landing".
"Obviously, the interest rate hikes are starting to kick in," he said.
House prices in Ireland have rocketed in recent years in tandem with a fast-growing economy and high levels of immigration, prompting concerns of a possible sharp correction.
Mr Cowen said housing output this year would probably hit 85,000 units, with "a similar sort of output" next year.
He said there were very strong fundamentals underpinning the market and that in real terms interest rates were still historically quite low.
The Minister declined to comment on likely measures in his forthcoming budget, due to be unveiled on December 6th.
Asked about media speculation he was considering cutting the top rate of income tax, he said: "There's another example of speculation that doesn't add much substance to the debate at the moment."
Mr Cowen said there would be a tax package in his budget but that it would not necessarily include income tax measures.
In the text of a speech to a Thanksgiving lunch hosted by the US Chamber of Commerce, Mr Cowen said he remained opposed to any harmonisation of corporate tax rates within the European Union.
Ireland's corporate tax rate - one of the lowest in Europe - has been a major factor in attracting the foreign investment.
Mr Cowen said the fact Ireland was taking part in talks with the EU did not mean a softening in its position.