Construction BUSINESS

The Irish construction industry is positioned for significant growth in housing output, potentially reaching 40,000 homes annually if operating at full capacity, according to Turner & Townsend. Currently, at 80% capacity, the sector’s potential to ramp up construction activity is highlighted by managing director Philip Matthews, who sees this as a feasible target if the industry were fully operational. State interventions such as those by approved housing bodies and the Land Development Agency have played a crucial role in boosting housing projects, generating substantial activity that would have otherwise been subdued.

These interventions have already had a notable impact, with a record number of home constructions beginning in the first quarter of this year, surpassing levels seen since the financial crisis. Additionally, government schemes exempting developers from certain infrastructure and water connection charges have further bolstered construction activity, providing stability amidst material inflation. Looking ahead, contractors anticipate a decline in tender price inflation over the coming years, although rising concrete costs remain a significant driver of inflation, with labour expenses also expected to rise in 2024.

Despite the positive outlook, subcontractors are facing sustained cost pressures from post-pandemic and geopolitical disruptions, particularly driven by rising labour costs due to the increased cost of living. This strain on labour costs is inflating tender costs and presenting challenges to project viability. Nevertheless, the construction sector in Ireland is poised for growth, supported by state initiatives and industry resilience, with the coming years likely to test the industry’s ability to manage inflationary pressures and sustain the momentum required to meet the nation’s housing demands.

Source: Business Post