The Construction Employers Federation (CEF) has also warned thousands of building jobs remain in the balance, as the housing market reels from a virtual collapse in activity.
The calls came as builders returned from July holidays.
CEF Managing Director John Armstrong has insisted the government now needs to step-in and take urgent affirmative action.
Mr Armstrong said the fast pace of the crisis required prompt action to restore normality to the market.
The CEF's suggested measures include:
- An injection of liquidity by banks and building societies making mortgages easier to obtain
- Government to consider using public funds to buy up stocks of new houses to assist with the need to provide social housing but also to stimulate the market
- A significant cut by the UK Government in Stamp Duty for first-time buyers to enable them to take advantage of the opportunities provided by recent market corrections
- Streamlined planning procedures to enable new building projects for affordable and social housing to be brought forward faster
- A commitment from Government that no further regulatory burden will be placed on the house building sector until the market has recovered.
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The Federation chief said the largest threat came from the short-term effects of the 'credit crunch' and escalating energy, and general running costs.
"This is probably the bleakest period the house building industry in Northern Ireland has faced in many decades," he said.
"It's an industry that contributes almost £1.5 billion annually to the local economy, is driven by small and medium sized enterprises (SMEs) and provides jobs for around 37,000 people."
Despite the rapid downturn in the market, Mr Armstrong insisted there is still an element of demand for new homes, but this alone will not secure the uncertain future of the industry.
Mr Armstong said: "CEF fears that many of the SMEs, which are the dominant force in Northern Ireland, may not survive the current crisis if action is not taken quickly to stimulate this important industry."
The future of the industry and redevelopment of the Province rests on the long-term stability of the construction industry, Mr Armstrong warned.
"Uncertainty in house building could also undermine the Northern Ireland Executive's strategic commitment in the Programme for Government 2008-2011 to tackle effectively the region's serious shortage of affordable housing," he said.
"The industry's ability to recover quickly when conditions eventually change could also be seriously compromised because it is likely thousands of jobs will be lost and this will lead to an acute shortage of professional management and skilled workers.
"The implications for policy makers could also be far reaching. Northern Ireland is currently not keeping pace with demand for new homes and over 200,000 are projected to be needed by 2015."
"Northern Ireland needs a vibrant house building industry to meet the challenges ahead," he added.
(PR/JM)
