Building Costs continue to rise slowly in first half of 2012

New figures from the Society of Chartered Surveyors Ireland (SCSI) show that building costs increased slightly in the first half of 2012, continuing a trend of moderate price increases over the past 12 months.

The Society of Chartered Surveyors Ireland Tender Price Index, which has been running since 1998 and is the only independent assessment of construction tender prices in Ireland, shows that construction tender prices increased by 1 per cent since the end of last year and were up 3 per cent for the full year from the first half of 2011.

Andrew Nugent, the Chairman of the Quantity Surveying Professional Group of the SCSI said “the continued increases in building costs are due to rising input costs such as building materials and energy costs such as oil. As an island nation, we rely on world market commodities which can have a significant impact on our cost competitiveness”.

“Furthermore, the increases in building costs over the past 12 months continue to reflect the reality on the ground that there is a shortage of new construction projects and consequently a diminished pool of available contractors. This is due to both company failures and the focus by Irish contractors on overseas markets” he said.

According to the SCSI Index, construction tender prices have fallen by approximately one third since their peak in the first half of 2007 and are now still only at a level last seen 13 years ago, in 1998.

Commenting on the shortage of available skills for specialist construction projects, Mr. Nugent said that it was likely that sub-contract prices for certain projects would continue to rise more significantly if major projects requiring such skills are given the go-ahead.

“On a positive note, the recent Government announcement of a €2 ¼ bn investment in Construction projects including schools, care facilities and infrastructure will provide the construction industry with a welcome boost, as well as creating an additional 13,000 jobs. The effect of this stimulus package on construction costs remains to be seen but we will continue to monitor it”, Nugent concluded.