The Construction Industry Federation has warned that although over 60,000 new houses will be built in 2003, the sector is facing difficulties as demand is expected to drop in the future.
In its mid-term review released today, the CIF notes that the gross value of construction output in 2003 is forecast to be €21 billion, which is 15 per cent of GDP.
However, with demand for housing forecast recently by the ESRI to decline in the medium term, the CIF warns the sector will experience a downturn.
It estimates the industry's contribution to State coffers will decline by one per cent this year, costing the industry around €200 million in lost revenue.
According to joint research by the CIF and the Irish Home Builders' Association, housing demand will gradually decline with projected output at 48,000 housing units annually up to 2006 and 42,000 units from 2006 to 2011.
"The IHBA now believes that supply and demand of private housing is nearing equilibrium," a statement from the association said. "The IHBA is of the opinion that 2003 will see a peak in housing output.
Private sector non-residential investment remains particularly weak, the review notes, with output now back to below 1997 volumes.