OVERVIEW
Irish construction market trends and key drivers
The Irish construction market in Q2 2026 can be characterised as stable in the short term, but increasingly exposed to volatility and medium-term uncertainty due to the ongoing conflicts in the Middle East. Activity levels remain relatively strong, with contractors operating at high utilisation and maintaining near-term pipelines. However, there is clear evidence that the market is transitioning away from the more predictable conditions seen through 2025.
This shift is reflected in deteriorating market sentiment over the past 12–18 months. The proportion of contractors reporting stable conditions has declined from a peak of 77.8% in late 2024 to 53.8% in Q2 2026, while those identifying a cooling market have increased from 11.1%to 30.8% over the same period. This indicates a gradual softening in confidence as forward visibility weakens.
Tendering dynamics have also shifted, with the market becoming increasingly competitive. The proportion of contractors describing conditions as ‘lukewarm’ has risen to 76.9% in 2026, up from 53.3% in 2025. This reflects sustained price-led competition and a reduction in contractor leverage.
Despite this more competitive environment, headline tender price inflation remains relatively moderate in the medium term, averaging approximately 2.0–2.6% beyond 2027. However, this masks a short-term increase to around 4.8% in 2026, suggesting emerging cost pressures within the system.
The cost environment itself is becoming more complex, with a growing divergence between recent stability and future expectations. Over the past 12 months, material price inflation has moderated significantly across key inputs. Aluminium curtain walling has reduced to 1.2%, while reinforcement bar has moved from deflation into modest growth.
However, forward-looking data indicates that this stability is unlikely to persist. Expected material price inflation has risen sharply across key commodities, including reinforcement bar (14.7%), structural steel (13.0%) and concrete (10.9%), alongside increases in copper and sheet metal of 10.0%. The impact of the Middle East conflict, and how long these price increases continue, will depend on how quickly the situation is resolved.
Labour costs, by contrast, remain more stable but persistently inflationary. Wage growth has moderated to approximately 3.0–4.0%, but continues to act as a structural pressure. Notably, a growing proportion of contractors report more pronounced increases in the most recent period, suggesting that labour remains a key underlying driver of cost movement.
Overall, the Irish construction market is entering a new phase characterised by diverging cost drivers and increasing external influence. The combination of rising input cost risk, persistent labour inflation and softening demand conditions suggests a market becoming more exposed to global supply dynamics and geopolitical factors, rather than purely domestic fundamentals.
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