Daily Newsletter

30 July 2024

Daily Newsletter

30 July 2024

Commercial construction inflation rate in Ireland dips to 3%

H1 2024 saw a 1.5% national rise in commercial construction inflation, mirroring the growth rate seen in H2 2023.

Satarupa Bhowmik July 29 2024

The latest tender price index from the Society of Chartered Surveyors Ireland (SCSI) has indicated a decrease in the Republic of Ireland's national annual rate of commercial construction inflation to 3%.

This marks a significant slowdown, with the rate of increase stabilising over the past six months.

The first half (H1) of 2024 saw a national increase of 1.5% in commercial construction inflation, mirroring the growth rate in H2 2023.

The median national inflation rate for the year-to-date period, from July 2023 to June 2024, has fallen to 3%, a drop from the 6.2% recorded in the preceding 12 months.

Regional disparities have emerged, with Munster experiencing the highest median inflation rate of 2.5%.

In contrast, Dublin did not see any increase beyond the 1.5% rise recorded in the previous six months.

Leinster (excluding Dublin) and Connacht/Ulster both reported a 1.5% increase, down from 2.2% and 2%, respectively.

Commenting on the trend, SCSI Quantity Surveying Professional Group chair Donal Hennessy stated: "These figures illustrate the dramatic change we have experienced with regard to commercial construction inflation over the last two years. In the first six months of 2022 inflation reached a record high of 7.5%, while the annual rate of inflation hit 14%. The respective figures now are 1.5% and 3%.

"The reduction in the rate of increase is due in the main to a more competitive commercial construction market and reduced-price volatility for construction materials. Three out of four respondents believe tender prices will continue to increase in the second half of the year while a fifth anticipate prices will remain the same."

Hennessy also highlighted potential challenges for the sector, including new government levies on construction and demolition waste disposal, along with a surge in fuel expenses and labour costs.

SCSI president Kevin Hollingsworth added: "The gradual return to modest tender price inflation rates over the last three six-monthly reporting cycles has been a positive development and if it can be maintained will be important in helping improve the competitiveness of the commercial construction sector."

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