There are a number of issues here.
First of all through section 48 (I think), the exchequer is basically paying almost half the construction cost of these holiday homes. Note that the buildings can only be used as holiday homes and not as a place of residence in order to be compliant with the tax rules. This has the perverse result of small rural and costal villages being surrounded by suburban style housing estates which will remain largely empty for most of the year. This housing does nothing to help locals or non-locals actually buy a house and live in the area and in fact probably makes it much more expensive because builders will want to concentrate on the much more lucrative holiday home business. This tax incentive is perverse, massively expensive and is ruining the country.
Secondly, the proliferation of holiday homes is destroying traditional tourism. I only have anecdotal evidence for this, but there are a few villages on the west coast I visit at least once a year and there has been a noticable decline in the business done in pubs, restaurants, B&Bs, etc. even as tourist numbers grow. It's hard to explain but I think that many visitors these days will load up the boot with groceries and booze from their local Dunnes before heading down to stay in a holiday home. I'm not saying that there is anything wrong with people staying in holiday homes (I do it myself) but it is odd that this unsustainable model of tourism development is being part funded by the exchequer to the detriment of everyone (visitors and locals alike) bar a small number of local builders and landowners.
The funny thing is how divided such villages/communities are about such development. Unfortunately, it seems that most people in such areas have swallowed the "rural development" propaganda. You're constantly hearing local councillors and such types bleating on about An Taisce, Dubliners, city-types, etc. trying to repress "rural folk", retard economic development "in the wesht", depopulate the countryside, etc. The solution advocated is to allow any sort of development with no regard for long term effects just so that a small few local builders and landowners can afford to buy the latest model SUV. This would be funny except that many in such communities find the victimhood argument appealing and then support any sort of crap development even though it's damaging to their own interests.