"It seems the adjustment has started towards less increases in the price of houses, " said the Spanish commissioner, who met economists and attended a lunch hosted by the Irish European Movement on a visit to Dublin last week.

He was also briefed by finance minister Brian Cowen after the announcement of the 2007 finance bill on Thursday.

Almunia said he believed the current signs from the housing market pointed to an easing off of house price inflation rather than a dramatic decline in property values.

"If this is the case and the adjustment is gradual I think we have no reason to be concerned, " he said.

Recent data from mortgage providers, estate agents and other sources in residential property have indicated a slowdown in price increases over recent months.

The latest Permanent TSB/ESRI house price index, released last week, showed price growth of 11.8% last year.

There was a sharp drop in price appreciation over the second half of the year, however, according to the survey.

Growth over the last six months of 2006 was just 3.8% compared to 8% over the first half.

While the housing market did not seem a cause of concern to Almunia, he said there were issues Ireland needed to address if what he referred to as the impressive "evolution of the Irish economy" was to continue. Rising input and labour costs are hitting the export sector, he said. "Ireland has been losing competitiveness year after year."

Following a week in which Motorola announced the closure of its Cork plant in favour of conducting software development in China, and Limerick's Thompson Scientific shifted its operation to India, Almunia called for "more efforts in R&D and more efforts in training the labour force" to ensure high-skilled jobs could be created and maintained in Ireland.

"Probably you have made a lot of efforts in education but there is still more action needed to improve skills and the qualifications of human resources, " he said.