The Construction Industry Federation (CIF) has called for further reform of stamp duty and mortgage interest relief in order to restore confidence in the housing market.
Warning that housing completions may fall to as low as 50,000 units in 2008, the body said in its annual review of the construction industry that "confidence has presently deserted the housing sector".
Federation President Hank Fogarty said the market had stalled as a result of "negative sentiment."
Speaking at the launch this morning of the CIF's annual Review and Forecast report, Mr Fogarty said: "On the supply side activity levels have fallen significantly and the prospects are that as low as 25,000 units will be built during the first 6 months of the year."
"It is imperative, therefore, that confidence be restored sooner rather than later so that a serious shortfall in housing completion numbers does not arise in key growth areas.
The priority for Government should be to achieve equilibrium in the market at the medium-term level," he said.
Earlier this week a review by DKM Economic Consultants showed housing completions this year will drop to 77,000 units from a record 88,219 in 2006 before bottoming out at 60,000 units a year in 2008 and 2009.
Calling for a reduction in the top rate of stamp duty from 9 per cent to 5 per cent, Mr Fogarty said "the time is now right for a radical review of stamp duty."
The CIF is also calling for a reduction in stamp duty rates for investor in the new homes market in order to promote investment in the domestic market "rather than facilitating export of our investments abroad."
Mr Fogarty also called for capital expenditure on infrastructure projects to be maintained, saying it that "if required," the Government "must borrow and borrow up to the limits permitted by the Stability and Growth Pact to fund infrastructure development planning."