A further 80,000 new homes are expected to be built in 2006, according to construction firm Davis Langdon PKS annual review.
The review said it expects the volume to grow by 1 per cent in 2006, representing the 13th successive year of growth in the industry.
The review also said housing now accounts for over 60 per cent of total new construction output.
The managing director of DLPKS, Norman Craig, said: "The phenomenon that is the Irish construction industry continues its remarkable journey. . . . Driven by the completion of a further record of 87,000 new houses, the construction industry is now the most important element of Irish economic growth.
"In the longer term, we do not believe that there will be a dramatic fall in the number of houses being built. We are of the opinion that there will be a slow decline in the number of completions as the market demand is met and as the demographic figures require fewer houses," he added.