Building costs to continue rising but at slower pace, surveyors predict

Building costs will continue rising this year but the pace of inflation should slow in coming months, surveyors say.

The prices that builders bid for commercial contracts rose 22 per cent over the past 18 months as the Government eased Covid curbs, demand for materials grew and energy costs soared, according to the Society of Chartered Surveyors Ireland.

Its members believe builders face further inflation in the second half of this year “but at a lesser rate” than over the past 18 months, says Kevin Brady, the organisation’s chairman, in a new report.

The group’s latest Tender Price Index calculates that building projects costs rose 7.5 per cent in the first half of this year, and 14 per cent over the 12 months to the end of June.

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Costs rose 7 per cent in Dublin and 8 per cent in the rest of the Republic, the society notes.

Surveyors blame Russia’s invasion of Ukraine, material price volatility, labour shortages and energy inflation for the problem. Pent-up demand for construction has worsened the situation, they say.

Most expected prices to stabilise this year as the industry and suppliers adjusted to post-pandemic demand.

However, the Ukraine war added further pressure, as it drove up the cost of energy and some building materials.

Mr Brady repeated the society’s warning that inflation was threatening construction projects’ viability.

Surveyors believe the industry is nearing peak capacity, although Mr Brady suggests that the looming economic downturn could boost competitiveness.

The society bases its figures mainly on building projects worth more than €500,000 of different types and across different locations. It cautions that they should be regarded only as a guide.