A lobby group has demanded that the Border, Midlands and Western region be exempted from increased stamp duty on second homes, a measure introduced after the third Bacon report.
The group is hoping for a large turnout at a public meeting in Knock, Co Mayo, tonight when its campaign will be formally launched. The Association to Protect Housing in the BMW Region, which is led by auctioneers, solicitors and developers, argues that investors are now turning to Spain and Portugal to buy holiday homes.
"The market is going downhill. Developers who have bought land are holding back. They are sitting on it until they get this changed," said Mr Keith Anderson, chairman of the association.
Mr Anderson rejected the suggestion that locals did not benefit from investors buying second homes in the region or that the withdrawal of investors from the market would help first-time buyers.
"When there is a building boom, it brings more money into the area and everybody benefits. This region is only starting to see the boom now but this could take millions out of the local economy."
He said that while the EU had accepted the BMW region needed help and was pumping in money to attract investment, the Government was putting "a massive barrier in the way of would-be investors".
Mr Anderson, an auctioneer in Donegal town, said the impact of the June increase in stamp duty to 9 per cent would only be seen next spring but auctioneers were already seeing investors withdraw from the market.
"Builders won't build if there are no investors buying, because we don't have enough first-time buyers in this region," Mr Anderson said.
He said that, on average, between 30 and 40 per cent of houses in new developments in the BMW region were sold to investors, who in turn rent to people who can't afford to buy their own homes. The association claims the BMW region is being punished by measures designed to tackle the housing crisis in Dublin.
A delegation is due to meet the Minister of State responsible for housing, Mr Robert Molloy, next week. They will seek a return to stamp-duty rates of 3 per cent and will also call for the abolition of a tax of 2 per cent per annum for the first three years for people buying second homes.
As a measure to help first-time buyers, the association says the Government should refund them the 12.5 per cent VAT incurred in buying a house. Invitations to tonight's meeting have been sent to some 2,000 people with links to the building industry.
Mr Anderson said he accepted there was a problem with holiday homes in western regions but he blamed this on poor planning decisions. "The problem has been with planners letting people build everywhere. But if people in Dublin or the North work hard and have the money, they have a right to own a holiday home here," he added.