A former head of the Construction Industry Federation has told the banking inquiry that the level of activity in the sector reached unsustainable levels during 2006 and 2007.
Former CIF Director General Liam Kelleher said it resulted in too many houses being built and too much economic activity being dependent on the construction sector.
Mr Kelleher, who was head of the CIF from 1993 to 2007, apologised for his part in events and said it made mistakes in not listening to contrarians and believing forecasts of a soft landing.
In response to a question from Fine Gael TD Eoghan Murphy if CIF bore responsibility for the crash, Mr Kelleher said it did but it was one of the many players seeing an optimistic scenario for Ireland.
He said there were pressures to increase housing supply from across the board and all political parties, and there was also an ambitious series of National Development Plans.
Mr Kelleher said CIF did not make political donations. Asked why the industry was such a significant donor to political parties, he said he could not answer and it was a matter for individual members.
Mr Kelleher said he wrote to RTÉ following the broadcast of the Future Shock programme in 2007.
However, he said he did not object to the content, rather he relayed that the tone was alarmist and was not what they would expect from the national broadcaster.
Chairman Ciarán Lynch quoted from their press statement at the time, which said pessimism about the Irish economy was completely displaced.
Mr Kelleher said they were too optimistic and that optimism declined rapidly throughout 2007.
He said the style of the programme was unduly alarmist and tabloid.
CIF asked abut relationship with Fianna Fáil
Labour Senator Susan O'Keeffe asked how close CIF was to Fianna Fáil.
Mr Kelleher said he could only speak for the federation which treated all parties equally, he could not speak for individual members.
The federation's current Director General and former junior minister, Tom Parlon, said he accepted that CIF should have done more to encourage responsible behaviour in the industry.
Mr Parlon also said that although CIF had initial concerns about the National Asset Management Agency, it now viewed the agency as part of the solution to the current situation.
He said the level of NAMA discounting was shocking and they did not realise the extent of the exposure in advance.
Mr Parlon added that NAMA was "absolutely not" a bailout for developers.
Meanwhile, the chief executive of the Institute of Professional Auctioneers and Valuers Pat Davitt told the inquiry that valuers have to assess property based on open market value.
Mr Davitt said valuers use standard methodologies to do this.
He said they would take calls from developers and bankers, during which they would be asked questions about different aspects of the sale.
He did not see a problem with taking a call from them, however he said it would be a very "foolish valuer" who would change a value - up or down - based on these discussions.
Asked by Sinn Féin's Pearse Doherty whether it was appropriate for IPAV to be lobbying for the abolition of stamp duty in 2006, Mr Davitt said if it was going to help first time buyers, it would have been ideal.
Inquiry hears from Ulster Bank's auditors
The banking inquiry has heard that in 2007, Ulster Bank Ireland transferred €4.5bn in property risk from its accounts to its Northern company which was regulated in the UK.
This allowed it to circumvent the property sectoral limits set down by the Central Bank.
Fianna Fáil's Michael McGrath asked auditors Deloitte if it was aware of the move.
Gerry Fitzpatrick, head of audit at Deloitte for Ulster Bank, said he was aware of it and it was properly reflected in the accounts.
Mr McGrath asked whether in light of the £14bn (€19bn) bailout from Ulster's parent Royal Bank of Scotland, if they could have done more to ring alarm bells.
Mr Fitzpatrick said they reflected the transactions but could not foresee the significant deterioration in asset values.
Senator O'Keeffe asked how people could understand auditors saying they did their job competently when the bank ended up in such a bad state.
Mr Fitzpatrick said an audit was a picture in time with substantial judgements underpinning it.
He said it was not an insurance policy or a prediction of the future. He said he did a good job.
Some of the discussion centred on the limits of accounting standards. Mr Fitzpatrick said this meant they could only provide for bad debts on evidence of incurred losses.