According to the bank, new housing stock in Ireland will increase from a suggested 18,500 to 22,500 - a leap of 4,000 new homes.
However, "considerable supply overhang" has seen the bank's predicted turnover for next year slashed from 15,000 to 10,000. This would make 2010 the lowest total since records began in 1970.
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Ulster Banks said it is "reasonable" to expect growth beyond next year, suggesting the figure of 10,000 is "well below" estimates of medium-to-long term housing demand.
It suggested this is put at 40,000 or more by the ESRI past 2012.
"So beyond the current and ongoing severe adjustment, it is likely that from 2011 on there will be some positive impetus to growth from housing," the bank said in its quarterly economic outlook.
Overall, the bank estimates that house completions in the three years from 2008 to 2010 will be 84,500.
Meanwhile, the report estimated house prices have fallen by 35% from their 2006 peak, and will eventually slump by 45%.
(PR/BMcc)
