THE new home-renovation tax break helped building activity last month grow at the fastest rate in nine years.
The increase in renovations contributed to a sharp rise in overall construction activity during the month, solidifying the green shoots of a recovery in the building sector.
The industry has now recorded its fourth month of expansion -- after six straight years of declines.
The figures come from the latest Ulster Bank Construction Purchasing Managers Index, a closely watched gauge of the industry's health, which recorded a 58.3 reading for the month. Any reading over 50 indicates expansion.
"There are now consistent signs of a turnaround," said Ulster Bank chief economist Simon Barry. "People should take heart from this, 2014 is shaping up to be a better year for builders."
House-building activity was the single biggest contributor to growth, with a jump in home-renovation projects providing a major boost, Mr Barry said.
This was driven by the Government's Home Renovation Incentive, the scheme introduced by the most recent Budget to stimulate the building sector.
The scheme refunds any VAT charged on renovations costing between €5,000 and €30,000, performed by builders who are tax-compliant.
Further solid gains were also recorded in commercial building activity, though activity on civil engineering projects continued to lag some way behind.
Employment continued to increase for a fourth consecutive month in December, though at a slightly slower pace in comparison to November.
Confidence among the companies surveyed was the highest in the index's history, with improving economic conditions the main driver of optimism.
Two-thirds of respondents said they expected to be busier in 12 months' time than current levels.
"Perceptions of improved conditions in the Irish economy generally along with opportunities in overseas markets were the main drivers of the high confidence levels, as Irish constructors clearly believe that their industry has turned the corner," Mr Barry said.
He warned, however, that the figures must be put in context.
"This growth looks impressive, but it's a very early-stage recovery.
"There's a big huge caveat -- building work on new homes has contracted by about 90pc in comparison to 2006, at the height of the boom, so the sector was bound to bottom out at some point. There's still a long way to go."