The rate of house price increases in parts of the west now exceeds that in Dublin, according to Mr Bobby Molloy, the Minister of State responsible for housing, who has criticised those demanding the scrapping of stamp duty increases introduced after the third Bacon report.
He said county councillors who have backed the campaign should instead concentrate on getting their own house building schemes out to tender.
Mr Molloy said the situation could not be allowed to continue where investors were buying up large numbers of houses in new developments and then letting them on high rents.
"What was happening was that people were speculating, buying up multiples and letting them. Their main interest is in the capital gain of the asset over two or three years," Mr Molloy said.
The increase in stamp duty to nine per cent and the two per cent anti-speculation tax introduced during the summer were beginning to have an effect, he said.
Mr Molloy said the arguments put forward by a group calling itself the Association to Protect Housing in the Border, Midlands and Western region did not stand up. The Construction Industry Federation is backing the campaign, as are many local politicians, including Fianna Fail and Fine Gael members of Sligo County Council.
Mr Molloy described the association as "a vested interest group" and said its arguments could not be taken seriously by anybody with a responsibility for public policy.
The allocation for housing from his Department had gone up 57 per cent this year but it was "up to local authorities to organise themselves".
"They are being asked to step up their building programmes, but the starts are not being achieved. They seem to be very slow in cranking themselves up to meet this huge demand that has arisen," Mr Molloy said.
He also argued against the claim that the withdrawal of investors from the market would lead to a slump in the construction industry. "We want to build 25,000 local authority houses up to 2003 so builders cannot say they are being made idle - the argument just doesn't stand up," he said.
Figures from local authorities confirm that there are long delays in getting houses built. While 209 houses will be completed by Donegal County Council this year, they are all from previous allocations and fewer than 100 of the 1,040 allocation for the period 2000 to 2003 will be started this year.
Local authorities have been told that they can "front-load" these allocations - in other words build them all in the first year, but this is not proving possible. In Leitrim, it is hoped to start 50 of an allocation of 260 before the end of the year. Sligo County Council, with an allocation of 240, has this year bought 10 completed houses, 12 are in progress and 46 are at tender stage and these are expected to start early in the new year. An additional 19 are at the planning stage.
All local authorities report difficulties acquiring land and getting contractors, particularly for smaller projects. Meanwhile, waiting lists are growing.