Looking at the broader trajectory, the construction industry's output remains influenced by significant disruptions over the past four years. The COVID-19 lockdowns in 2020 led to a sharp decline in construction activity, followed by the conflict in Ukraine in 2022, which created additional pressures on supply chains and costs. These events triggered a significant exodus of skilled labour from the Irish construction sector, with many workers returning to their home countries. The industry continues to feel the effects of this labour displacement, contributing to its current challenges in meeting demand.

The industry is experiencing a shift in focus, with housing emerging as the top-performing sector. Within housing, private housing is suggested to be performing better than others. This robust activity in the residential sector is likely bolstered by strong demand and ongoing cross-party government support, which was reinforced in Budget 2025

The Q3 2024 survey reveals an Irish construction industry still grappling with the aftermath of multiple systemic shocks. Despite strong demand across sectors, the industry is operating at just 77 percent capacity, with only 11.1 percent of respondents perceiving a warming market. This disparity between demand and capacity reflects the ongoing impacts of COVID-19 and subsequent geopolitical events, particularly the significant loss of skilled labour that has yet to fully return to the market. These workforce challenges, combined with ongoing material cost pressures, point to significant structural inefficiencies hindering growth.

Housing remains the top performer, with private sector delivery now outpacing the public sector, a shift that may impact affordable housing supply in the marketplace. The November 2024 approval of the new Sectoral Employment Order, which mandates wage increases of 3.4 percent in August 2025 and 3.2 percent in August 2026, provides clarity on future labour costs but may present additional challenges for project viability. While these structured wage increases could help attract and retain skilled workers, the industry's path to recovery and growth will depend largely on its ability to rebuild its workforce capacity while managing rising costs and administrative delays.

Access to labour and skills issues remain a critical challenge for the industry, driving up costs and extending project timelines, with construction labour costs rising by at least 5.0 percent

Material costs present another concern, particularly the anomalous 9 percent inflation in concrete prices compared to the 4.0 percent average. Sustainability efforts lag significantly, with 94 percent of contractors surveyed not conducting embodied carbon assessments on most projects, indicating a critical gap in adopting net-zero practices. Bureaucratic bottlenecks in planning and decision-making processes further compound these challenges. Political uncertainty surrounding the upcoming Irish election adds another layer of complexity, particularly for public tenders.