Housing supply

Construction sector warns rising costs will hit housing supply next year – The Irish Times

Rising costs will hit housing supply next year, according to a new report from lobby group the Construction Industry Federation (CIF).

It comes as 96% of construction companies report an increase in the cost of building materials over the summer, with 85% expecting further cost increases this year.

The rising cost of building materials has been cited as the top concern for businesses over the next three to six months, according to the CIF Economic Outlook, released ahead of the lobby group’s annual conference in Dublin on Thursday.

Access to a skilled workforce and labor costs rank second among industry concerns – cited by 72% of companies surveyed – followed closely by the ability to achieve healthy profit margin” thanks to construction projects and the cost of fuel.

Just over one in 10 businesses say the cost-of-living measures introduced by the government in the first five months of the year have been effective.

About “88 percent [of construction firms] estimate that the rising cost of building new homes will negatively impact housing supply in 2023,” the industry group said.

As many as 96% of construction companies reported an increase in the cost of building materials between June and August, and 85% expect the rise in costs to continue until the end of the year, a declared CIF. It comes as the government plans to impose a tax on concrete products under the mica repair scheme.

“Cost increases are having a significant impact on the construction industry, with increases in the cost of materials, labor and energy,” said CIF chief executive Tom Parlon. “The government’s budget announcement of a 10% tax on concrete products is out of step with the needs of public consumers and construction companies” given soaring inflation and its impact already on costs.

“We are concerned that this measure will result in additional costs for first-time buyers, people trying to extend their homes, affordable and social housing and public infrastructure projects, as it will drive up costs throughout supply chain,” said Parlon.

However, despite concerns expressed by member companies, the report says the sector remains “resilient”, with a significant number of companies planning to increase their turnover and workforce.

“Current indicators from our research indicate that the outlook is stable for construction companies this year, which have weathered the impact of Brexit, Covid closures and supply chain disruptions. But there are challenges ahead, particularly for housing targets, which now include the impact of the new tax.

Meanwhile, the government is still working to secure European Commission approval for its €1.25 billion plan to help businesses cope with energy costs this winter, but a high commissioner has given a “hearing equitable” on the proposal, said Tánaiste Leo Varadkar.

Commission Vice-President Margrethe Vestager also had no qualms about an aspect of the proposal which seeks to extend what is allowed under EU state aid rules, saying added the Minister of Enterprise.

The Temporary Business Energy Support Scheme (TBESS), which was announced in the budget, is subject to approval under European Union state aid rules.