Construction costs rising at Celtic Tiger rates, say surveyors

Society of Chartered Surveyors Ireland sees no let-up in the pace of price hikes

'It's clear the cost increases will also affect the cost of delivery of new homes as well as refurbs and extension to existing homes,' said the surveyors. 

Construction inflation, at over 8%, has doubled since the onset of the Covid pandemic and is running at Celtic Tiger rates, according to Irish chartered surveyors.  

The Society of Chartered Surveyors Ireland (SCSI) also sees no let-up in the pace of price hikes any time soon, and warns that although its survey applies to commercial buildings there is nonetheless a direct read across to the prospects for inflationary costs for new homes, and the costs of doing up existing properties.  

The authoritative survey is more evidence that the fallout from the huge spike in energy costs and the strain on global supply chains amid the recovery from the Covid-19 economic crisis, that has led to shortages of all types of goods from building products to semiconductors, is pushing up prices across the board. The surveyors also predict no let-up in the price hikes into 2022.

"It's clear the cost increases outlined here will also affect the cost of delivery of new homes as well as refurbs and extension to existing homes," said the surveyors. 

"Given the well-documented affordability and viability challenges faced by the new home sector, these increases underline the need for the Government to urgently address barriers to new housing delivery, especially with regard to planning and procurement issues,” said the surveyors. 

“Following the reopening of sites on April 12, it was generally expected tender price inflation would rise as the economic recovery gained momentum," said Kevin Brady at the SCSI. 

"However, the scale of the increase is much greater than anticipated due to supply chain issues and intense competition internationally for building materials. 

"This has led to exceptional increases in the cost of widely used materials such as steel, timber, and insulation products."  

Meanwhile, the cost of construction inputs remains at record levels, according to the monthly report from the Ulster Bank Construction Purchasing Managers' Index. 

Commercial and housing activity continued to expand in September, but the pace of growth in housing activity has slowed from August, according to the purchasing managers.