One in four contractors believe Government's construction policies are ineffective

Overall construction market 'holding steady', says sentiment survey

Around 24% of contractors in the Irish construction industry are unhappy with Government policy, with almost one in five seeing the market "cooling", a new report said. Picture: Pexels

Around 24% of contractors in the Irish construction industry are unhappy with Government policy, with almost one in five seeing the market "cooling", a new report said.

The Turner & Townsend’s Spring 2025 market intelligence survey looks at the first quarter of 2025 and comes in the first 100 days of the new coalition government.  The survey found 24% of respondents rating government policies as “least effective", with no respondents rating policies as “most effective", signalling a sizable dissatisfaction in the sector with current policies and policy frameworks.  "This poses a challenge for the new administration as it seeks to address housing shortages and infrastructure needs," the report said.

Market participants reported that the governmental transition has slowed commitment from Approved Housing Bodies (AHBs) in progressing high-density residential projects. "While most view this as a temporary situation related to the election cycle rather than a fundamental shift, it nonetheless impacts the short-term residential pipeline," said the report.

The survey was carried out before the introduction of tariffs and their potential impact on the global construction sector. Overall, the data indicates the Irish construction market is holding steady, with 73% of respondents characterising conditions as ‘staying the same’, though 18% of respondents perceived a cooling of the construction market, up from 11% in the last report carried out in the Turner & Townsend Autumn Q3 2024 report. Just 9% see warming conditions for growth in the immediate future. "This growing perception of market cooling suggests shifting sentiment among industry participants that may reflect concerns about policy direction or economic headwinds," the report said.

Skilled labour shortages was viewed as the most significant hindrance in the industry in Ireland, followed by government bureaucracy and delayed approvals, difficult contractual conditions, excessive lead times, and too many contractors competing for too few projects.

Material and labour costs are experiencing moderate inflation, with 64% of respondents reporting marginal increases in material costs and 45% noting similar rises in labour expenses. Contractors anticipate a gradual easing of tender price inflation over the coming years, "which could help improve project viability if realised. However, persistent labour shortages represent a structural challenge that may limit productivity gains and drive wage inflation, particularly if housing output accelerates," the report notes. 

Similarly persistent is the need to address the skilled labour shortage through training initiatives, immigration policy changes, and technological innovation for the sector's long-term health.

Operating capacity stands at 80% percent across surveyed contractors, largely unchanged from the previous sentiment survey. 

The housing sector takes up 55% of market activity in the Irish construction landscape, split between private housing (32%) and public housing (23%). Schools and colleges accounting for 23% percent of sub-sector activity, with commercial offices (9%), healthcare facilities (9%), and data centres (5%) rounding out the major areas of focus.