MARKET SENTIMENT AND OUTLOOK

Indicators show market cooling amid strong competition

SENTIMENT

Contractor sentiment indicates that 69 percent of respondents believe the market is ‘staying the same’ (a reduction of 11 percent compared to Q3 2024), while 19 percent describe it as ‘cooler’ (an increase of 8.0 percent over the same period) and 13 percent as ‘warmer’ (an increase of 2.0 percent).

Tendering activity is largely viewed as lukewarm, defined by strong competition and moderate pricing. When compared against our previously issued market intelligence reports the percentage of respondents defining tendering market conditions as ‘warm’ has reduced by a significant 36 percent compared to our Autumn report in Q3 2024. Simultaneously, the percentage of respondents that have defined conditions as ‘cold’ has increased from zero to 20 percent over the same period.

Despite the changes in tendering conditions, contractors report operating at an average 81 percent capacity, suggesting that while current workloads remain strong, visibility beyond 2026 is weakening.

LABOUR AND MATERIALS

Labour

Over the past 12 months, labour costs have increased by approximately 3.0 percent, while material costs rose by just 1.0 percent, which includes a 2.0 percent decrease in the cost of reinforcement bar. This confirms a flattening of the material inflation that dominated 2022–2024.

Materials

There is a clear trend when looking at contractor responses to our recent surveys that the percentage of respondents seeing a “marginal increase” in material costs has reduced from 67 percent to 50 percent since Q3 2024. In addition, a ‘marginal decrease’ in material costs has been felt by 13 percent of respondents compared to zero percent in Q3 2024.

Looking ahead, both labour and material costs are expected to increase by an average of 3.0 percent over the next year, with concrete forecast to rise by 4.0 percent and reinforcement bar expected to rise by 3.0 percent. Labour remains the dominant cost driver, continuing to exert upward pressure across project delivery.

TPI

National tender price inflation has also moderated. We forecast tender price inflation of 2.9 percent in 2025, followed by 2.2 percent in 2026, 2.6 percent in 2027, and 2.4 percent in 2028. These figures align closely with other forecasts and with the Society of Chartered Surveyors Ireland at 2.9 percent. This marks a clear shift from 2024, when inflation expectations averaged around 3.3 percent. The data suggest that pricing has stabilised, with contractors prioritising competitiveness and workload continuity over margin growth.