House-builders, who have been strongly criticised in many quarters for their role in the escalation of house prices, have urged the Government to increase the first-time buyers' grant to £6,000 and extend the scheme to the purchase of second-hand homes.

In a pre-budget submission, the Irish Home Builder Association (IHBA) has also urged the Government to allow up to 20 per cent of houses and 40 per cent of apartments in new developments to be available for sale to the investor market and qualify for interest relief.

"The acute shortage of rental accommodation and the resultant increasing rents is creating serious problems for students, the elderly and expatriates returning to work in Ireland," says the IHBA. It has also called for the extension of the Seaside Resorts Scheme for a further two years and the restoration of interest relief on borrowings related to other tourist accommodation.

The association said that it is acutely aware of the damage caused to the industry by gazumping by "a very small number of house-builders". In order to counteract this practice, the association will publish, within a couple of weeks, its code of practice "which will afford a very welcome level of consumer protection to house purchasers and will help to stamp out this unacceptable practice."

The IHBA repeated its assertion that the single greatest impediment to the supply of housing at affordable prices by private housebuilders is the inadequate supply of zoned and serviced building land. It has also roundly criticised what it claims to be the inadequacies of the planning and appeal system.

In a separate pre-budget submission, the Small Firms Association (SFA) has called for strict control on public spending, reductions in corporation tax for small business and reductions in income tax for the low-paid to be included in next month's budget. It also states that social welfare increases should be focused on the elderly and incapacitated and that any social welfare increases should not make it more difficult to reduce the numbers of longterm employed.

"Any increases in spending must be matched by real economic gains to the economy. If spending proposals fail this test, then prudence must prevail and any exchequer surpluses must be set aside to provide for future needs," the SFA stated.

The SFA chairman, Mr Kieran Crowley, said that the 1999 budget will be critical in maintaining a low-inflation environment and reducing the increasing problems of labour market tightening through focused tax reductions aimed at low-paid workers.

Mr Crowley added that there are significant danger signals appearing which will pose a serious threat to the economy.