The Irish construction industry is set to recover quickly from the continued impact of rising raw materials, labour and fuel costs.
The Construction Industry Federation’s Q2 2026 outlook survey found that 96% of respondents expect higher labour and material cost and CIS expects this to result in a 1% fall in project starts this year but bounce back strongly in 2027 as inflation eases.
The Central Bank predicts that inflation will fall back from an increase of 2.9% in 2026. This will help fuel a recovery in starts with a rise of 12% forecast by CIS for next year that will accelerate to growth of 18% in 2028 aided by more capital spending for housing and infrastructure.
Residential boom
The residential sector remains by some distance the industry’s biggest driver and will be a key driver in a 4% rise in house prices predicted for this year by the Bank of Ireland (BOI), which reported that 38,191 new homes were completed in the 12 months to the end of March.
This was higher than anticipated and CIS is predicting that starts at an underlying level (work up to €100 million) in the residential sector will rise by 15% to an estimated €8.4m in 2027.
CIS has identified a strong programme of social and private residential work at an underlying level with more than 700 projects with planning permission and expected to start on site over the next 12 months.
This ranges from smaller projects such as Melvyn Properties’ plans for 21 houses in Kinnegad, where work is expected to begin before the end of 2026, to developer Graphite Fusion’s plans for 57 flats and 25 houses in Galway. If an appeal succeeds, work could start early next spring.
Civil surge
The industry’s second largest source of work remains civil engineering, where large scale infrastructure projects in the National Development Plan plus large-scale renewable, data centre, and district heating projects are fuelling workload.
The main tender for the DART+ West Programme should be launched in Q3 2026. Work on this scheme will run until 2038, but work at an underlying level (projects up to €100 million) is also growing. CIS expects underlying starts are expected to rise by 11% to €2.2 billion.
More than 300 infrastructure projects in Ireland have planning permission and are expected to start construction over the next 12 months.
Examples include a package of rail improvements on the line from Burtonport to Letterkenny Greenway and a plan to improve the road network from the Docklands in Cork into the city centre with applications to tender currently sought.
Wider prospects
More than €1.6 billion-worth of underlying work in the community, hospitality & sport sector should start on site next, as starts rise 15%.
Work coming up in this sector in the next year ranges from a major redevelopment of Meath County Council Chamber’s Buvinda House offices to the Creeslough Community Regeneration Project.
With four of the other five sectors covered by CIS also expected to produce a rise in starts next year, this should ensure the recovery is wide-ranging.
