Overall housing output may fall by as much as almost 18 per cent next year, the construction industry conceded today.
Director of the Irish Home Builders' Association (IHBA) Hubert Fitzpatrick predicted output could drop to as low as 37,000 units in 2009 compared with 45,000 this year.
"Given that the medium-term demand for houses is 60,000 units each year, this would result in supply falling far short of demand in key growth areas next year," he said.
"Based on this medium-term rate, supply and demand equilibrium would not return to the housing market until 2010."
Mr Fitzpatrick expressed confidence that improving sentiment in the housing market would encourage higher residential construction activity than suggested in recent statistics.
"In terms of the final figure for completions, however, 2009 may fall between two stools, with units commenced towards the end of this year and early next year only being counted as part of the 2010 housing completion figures.
"From the industry's perspective, however, there is a potential for increased employment in the sector compared to current levels of employment in residential construction," he said.
Mr Fitzpatrick added that houses were now more affordable and that the main sources of uncertainty in the market in 2007, including stamp duty issues, have been addressed.
He was speaking at the launch of the website, homefacts.ie, an information resource for those buying a home.
Taoiseach Bertie Ahern said yesterday he did not believe there would be a quick "bounce-back" in the housing market.
Labour Party leader Eamon Gilmore called for urgent Government action for what he described as a crisis in the construction sector after CSO figures showed a 10.3 per cent drop in employment year on year.
Mr Gilmore said the figures made grim reading.
"They confirm the pattern seen in previous months and fit with economic forecasts that have been predicting a major decline in construction employment as a result of falling numbers of houses being built."