The soaring cost of construction materials is fuelling the housing crisis, the Banking and Payments Federation has said. 

Inflation in Ireland peaked at 9.5% last year as international supply chains were disrupted following Russia’s invasion of Ukraine. 

The Central Bank has forecast inflation will fall to 2.3% in 2025 but the impact on the construction sector has been more significant than other industries. 

“We’re conscious of the rising costs,” Banking and Payments Federation spokesperson Brian Hayes said. 

“Particularly when it comes to construction costs which have really gone up by about 23% from the end of 2019 to quarter three of this year. 

“While some of that is down to supply lines and challenges in the post-COVID environment, it does show the challenge people are facing to get on the housing ladder.” 

 Peyton estate, Rathcoole. Construction takes place in the Peyton estate in Rathcoole, Co Dublin. 26/02/2013. Photo: Laura Hutton/Photocall Ireland

Last year, there were 29,851 homes built in Ireland and Mr Hayes said that number will be higher again this year. 

“What we’ve seen which is positive is a very significant uptick and increase in the first 10 months of 2023 in terms of new housing starts,” he said. 

“[They’re] up about 70% on the corresponding period the previous year. 

“I think also the level of completions for 2024 is likely to be in excess of 32,000 units.” 

There have also been significant rent increases in 2023; the average rent for new tenancies increased by 11.6% year-on-year.

Main image: A construction worker at a site on George's Street Dublin, 16-03-2021. Image: Sasko Lazarov/RollingNews