Housing output in the State is expected to grow by more than nine per cent this year, producing up to 80,000 homes, according to the Construction Industry Foundation.
However, the body said a key issue facing the industry is the portion of the cost of a new house that goes to the Government in the form of tax - currently estimated at around 45 per cent.
The CIF's convention in Galway heard that the modest recovery in construction activity which was evident last year has accelerated during 2004.
Output is expected to peak this year and decline to around 50,000 units each year. However, the body called for a more "pro-active" approach by the four Dublin local authorities to plan for future population growth.
The CIF conference heard that as investor interest declines, more opportunities will be available for first-time buyers.
"Nationally, housing output is now meeting demand. There is a particular problem in the Dublin region where supply and demand are not in balance. The answer is a more proactive approach for the four Dublin local authorities to plan for future population growth," a report presented to the conference said.
"Essential to meeting demand in the Dublin region, there must be a focus on increasing the supply of serviced land and a more imaginative approach to land use and housing densities."
The conference heard that a key issue facing the construction industry is the price of a new house which goes to the Government in the form of taxation. CIF claimed that State taxes now account for up to 45 per cent of the average price (net of VAT) of a new home.
In 2003, the estimated total tax take from new homes was €5.2 billion, including capital gains tax, stamp duty, PAYE, PRSI, local authority development charges, corporation tax and VAT.
The CIF said output in the civil engineering sector declined by six per cent last year, but is expected to recover significantly this year and to grow by five per cent.
The body also said that, despite much media commentary to the contrary, independent research indicated that road construction costs in Ireland are consistent with average European costs.
"CIF is strongly of the opinion that the Government should stick to its target of an Exchequer Investment Programme of five per cent of GNP.
"This is the level of investment which will be required to provide the country with a first class capital and social infrastructure. It is very important for the future of the Irish economy that the Exchequer Investment Programme does not fall below this five per cent target."