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.
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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.
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By GlobalDataLeinster (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.”
