Potential home owners should not be waiting for further cuts in house prices, says CIF Head Tom Parlon, who says the construction industry can weather the current storm by refocusing on other projects.

Tom Parlon.

Would-be homeowners should not be sitting back waiting for more cuts in house prices as prices are now realistic.

That's according to the head of the Construction Industry Federation, former Progressive Democrats TD Tom Parlon, who is due in Galway next Friday, 23 May to speak to members of Galway Chamber at a business lunch.

"The industry has spoken very clearly by cutting off supply to the market. Throughout the country developers are cutting prices where the market dictates and prices are back by at least 15 per cent since mid-2006. People shouldn't be sitting back and waiting for more cuts, because as the Central Bank governor John Hurley said, prices are realistic now.

"This is not regional, it's a national return to confidence we need. Galway as a gateway has a huge population, it has the university and the IT, it has increased access, and the measures mooted in relation to the Western Rail Corridor and road infrastructure do a lot for its prospects as a hugely important regional city, Ireland and Galway in particular are well positioned to ride out the current storm," Mr Parlon said.

With the slowdown in the construction sector, it is a tough time for those in the business. However, Mr Parlon believes that it can ride out the storm through a combination of measures.

"There is no doubt that the downturn in housing output and sentiment have created problems in the housing market.

"The international credit crunch has also caused difficulties and potential buyers are sitting on the fence – there are going to be 45,000 new units this year as compared with 78,000 last year, and next year may be the same.

"However, all the demographic figures show that there is a 60,000 per year demand. The sooner confidence is restored, the better for buyers, owners and the economy."

He said the reduction in house building has severely affected the government's revenue as well as industry pockets.

"Every 10,000 housing units built is worth €1 billion to the State. So the reduction to 45,000 has knocked three to four percentage points off economic growth. This means we must bring back stability, even bringing output back up to 50,000 would add one percentage point."