A stabilising market in Irish construction

Tender price inflation moderates 

Inflationary pressures have eased significantly. Labour costs went up by 3.0 percent in the past year, while material costs increased by just 1.0 percent. This included a 2.0 percent fall in reinforcement bar prices. Looking ahead, both labour and material costs are expected to rise by around 3.0 percent in the next 12 months. 

Tender price inflation forecasts now sit at 2.9 percent for 2025, falling to 2.2 percent in 2026 and remaining below 3.0 percent through 2028. This marks a clear shift from the volatility of previous years towards a more predictable pricing environment. 

Housing and education drive activity 

Housing is still the biggest sector, making up 56 percent of market activity. For the first time, public housing is outperforming private housing. Education and public works also show strong performance, while private commercial and industrial sectors subdued. 

Procurement strategies are changing. Single-stage and two-stage tendering each make up 28 percent of the methods used. Negotiated and framework tenders are also included. Order-book coverage stands at 86 percent for 2025 but drops sharply to 61 percent for 2026 and 29 percent for 2027. 

Key challenges: labour shortages and competition 

Skilled labour shortages remain the most significant challenge, alongside government red tape and delayed approvals.  

Competition has intensified. ‘Too many contractors chasing too few projects’ is now ranked as the third biggest challenge in the supply chain. While programme durations and material lead times have improved compared to 2024, margin pressure persists. 

Future outlook: steady but uncertain 

The near-term outlook for Ireland’s construction market is stable, supported by public-sector projects and easing inflation. However, declining pipeline visibility, tight margins and persistent labour shortages point to a more competitive environment ahead.  

Contractors must adapt by making their supply chains more resilient. They should focus on sustainability and securing future work. This will help them survive in a market that’s shifting from pricing power to survival margins.