Stabilising construction sector still has shortage concerns

Hopes are high for housing sector, says end-year Turner & Townsend Construction Market Intelligence Report

Construction workers brave freezing temperatures as they work high above the Cork skyline, with Shandon Bells keeping watch as it bathes in winter sunshine. Picture: Cian O'Regan.

Stability is returning to the Irish construction industry after several turbulent years, according to a six-monthly survey across the sector.

However, the survey highlights ongoing concerns over skilled labour shortages, long lead times, and still-hiked material costs.

The country’s housing sector (including private housing) are signalled in this week’s Turner & Townsend Construction Market Intelligence Report as expected to be the best performing heading into 2024 after a previous 10% dip, with the commercial office market in a downturn.

“The housing sector is in an upswing, propelled by various Government-backed schemes aimed at stimulating housing delivery. This comes through in the responses on sector performance, with housing the top-performing sector once more. Private industrial and public works follow closely.

“However, the contracting market remains under pressure, grappling with increased wage costs, contributing to a rise in the average cost of preliminaries,” the comment on the survey notes.

“Contractors’ expectations of housing being the top performing sector are understood, with housing a top focus for the Government, and the level of funding made available for student housing, affordable housing, social housing, and cost rental,” the report said.

On balance, contractors surveyed believe the construction market is improving: 37.5% of respondents suggest the market is staying the same, 37.5% suggest that is warming, and 25% say it is cooling.

“The pace of construction inflation has decelerated and, while interest rates remain relatively high, we have observed a levelling off.

“To navigate this plateau, robust demand in certain sectors continues to exert pressure on resources across the industry,” the T&T report adds, identifying pressures from data centres, life sciences, and industrial as putting strain on material supply chains.

The industry faces intersecting challenges of skilled labour shortages, rising costs of construction, and excessive lead times, it stresses.

It revealed that despite sustainability and net zero being high on the Government’s agenda, “the majority of those surveyed responded that they were only seeing significant commitments to net zero on less than 25% of projects”.

“13% reported that none of their projects had a significant net-zero commitment, citing high costs associated with additional certification and compliance standards with materials and construction techniques.”