Davy Stockbrokers has lowered its economic growth forecast for 2007 from 5 to 4.5 per cent on the back of an expected slowdown in the construction sector.
The broker noted housing output now accounts for about 10 per cent of GNP, and there is growing evidence that the peak of the cycle has finally been reached.
It said it expected new completions to fall from over 88,000 in 2006 to 80,000 in 2007 - a 9 per cent decline in the volume of output.
This would as a "significant drag" on overall economic activity, it said. But consumer spending and the non-residential construction sector should both perform strongly again this year, it added.
It predicted that consumer spending growth would slow to 2.5 per cent in 2008 as the SSIA impact disappears.
"We have therefore left our 3 per cent GNP growth forecast for 2008 unchanged, but it is obviously off a lower 2007 base," it said.