At its annual review last week, the CIF delivered a bearish assessment for the housing market, forecasting that house completions would fall to 60,000 this year and would drop to 45,000 in 2008.

It cited department of the environment and ESRI projections, which said that housing demand would be between 60,000 and 71,000 per annum for the next five years, which means house building will not meet demand next year according to the CIF's figures. According to its projections, the number of new homes built will almost halve over the space of two years. More than 88,000 new houses were constructed in 2006.

The CIF's figure is at odds with two other studies published last week. A review for the department of the environment by DKM said completions this year will be 77,000 units and will drop to 60,000 next year. The ESRI's quarterly economic commentary meanwhile put completions to be 78,000 in 2007 and 65,000 in 2008.

In order to stem the tide against poor sentiment in the housing sector, the CIF said the government needed to act by cutting stamp duty. It is lobbying for the top rate to be slashed from 9% to 5%. It is also demanding that stamp duty be paid at the chargeable consideration, either the site value or 25% of the value of the property, whichever is the greater. Finally, it is seeking a cut in the 9% stamp duty rate on commercial land transactions.

Outgoing director general Liam Kelleher argued against suggestions that such a tax cut would leave the exchequer out of pocket. "When the government halved the rate of capital gains tax, it actually resulted in increased revenues and we believe the same will happen here, " he said.

However, industry observers were sceptical about the CIF's forecast for completions. "It's quite clear what they are doing. They are low balling it to the extreme because they are lobbying for tax cuts, " said one economist speaking off the record, who added that a further deceleration in the housing market would be needed before completions would drop as far as the CIF is saying next year. "Having said that, if you are going to change stamp duty, now is the time to do it. Not to long ago, it would have all gone into the builders' pockets, now buyers are likely to see some of the benefit, " he said.

The federation denies that it is scaremongering.

"In a way, it says a lot that the CIF would come out and be as blunt about the market. We are basing our figures on current levels of activity and what our members are seeing on the ground, " a spokesman said.

While the federation was at odds with the department of the environment on completions, it agreed on other figures. President Hank Fogarty said the department's estimation of 20,000 job losses was "probably correct", but said they had reached the conclusion through different means. "We are predicting a greater downturn in house building but feel a higher number of jobs will be taken up by other sectors, " he said.