The Irish Home Builders' Association (IHBA) has expressed confidence that improving sentiment in the housing market will encourage higher residential construction activity than suggested in recent statistics.

The IHBA reported an improvement in consumer confidence among its member firms which will, it claimed, lead to a pick up in housing starts as the year progresses.

The association expects therefore that 2009 will see higher levels of residential construction activity than is currently the case. According to IHBA Director, Hubert Fitzpatrick current statistics on housing starts indicate that housing output could fall to as low as 37,000 units in 2009 compared with 45,000 this year.

Mr Fitzpatrick said: "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."

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He added: "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.

"The main sources of uncertainty in the market in 2007 have been addressed. The budget significantly reformed stamp duty and increased mortgage interest relief. The fear of further increase in interest rates has now been dispelled, and all indicators point to reduction in interest rates later this year.

"In consequence of these changes and the very good value that is currently available, affordability has improved significantly."

According to the EBS/DKM Affordability Index, by September 2007 the cost to a first time buyer couple of servicing a mortgage had fallen to 23% of their disposable income compared with 26% by the end of 2006.

The IHBA suggest that in taking into account increased wages, reduced taxation and the current levels, the affordability index will lower to around 21.7% in May 2008.

To address the current confusion surround the housing market, the IHBA has set up a website www.homefacts.ie which has advice on affordability, tax and mortgages; designed to act as a step-by-step guide to house buying.

The IHBA has also revealed plans for a Code of Practice for member firms to regulate housing and apartment management companies.

(VB/JM)