Construction Costs in Ireland 2026: Q3 Wage Spike and Material Shifts

Tender Forecast 2026 (30th January 2026)

With building and materials cost inflation forecast of c.3.0% through 2026 and expected labour cost increase (due to Aug ‘26 SEO) in the range 3.2 - 3.5% in the same period, based on these assumptions I expect tender prices (for general building) to increase by up to 3.1% in 2026. This assumes that contractors targets gross margin of 7.1% given the expected level of activity in the market. With the forecast tender increase being in line with the past 2 years it is a good time to progress projects to take advantage of current prices.

The Irish construction sector in 2026 faces a unique situation: there is strong demand for housing and infrastructure, yet housing commencements have fallen by 80% in 2025. Extreme disruptions to supply chains seen in previous years have largely stabilised, new challenges have emerged for developers, contractors, and the public sector. These primarily revolve around rising labour costs and shifting material prices. 

As we have seen in recent years, and indeed months, in the current global environment things can change very quickly. With such a backdrop the key to success is staying focused and adaptable while looking to fix prices at Q1 rates.

Main Drivers of Construction Costs in 2026
A number of major factors are influencing construction budgets this year:

• August 2026 Sectoral Employment Order (SEO): New regulations have led to an increase in minimum hourly wage rates across the sector, affecting a broad range of construction workers.
• Evolving Costs Building Materials: Shifts in material pricing, especially for sustainable and energy-efficient products, are impacting overall project costs. Copper prices are near an all time high.
• Competition for pipeline: As companies look to have a strong pipeline of work to maintain capacity some margin reduction may take place to win work.  
• Geopolitical uncertainty: uncertainty about US FDI and energy cost linked to Middle East conflict.

Q3 Labour Impact: The 3.2% Wage IncreaseOn 1 August 2026, the implementation of the legally binding Sectoral Employment Order will happen. This order will result in a mandatory 3.2% wage increase for many construction workers, building upon a similar 3.4% rise in 2025. The ongoing wage increases are part of efforts to address the chronic shortage of skilled workers in the sector. Key Wage Changes Effective August 2026:

Worker Category & New Minimum Hourly Rate
Craftsperson (Bricklayers, Carpenters, etc.) - €23.74
Category A Worker (Skilled Operatives) - €23.03
Category B Worker (General Operatives) - €21.37
Apprentice (Year 4) - €21.37
 
In addition to hourly wage increases, employer contributions to pension and sick pay schemes are incoming. These additional "soft" labour costs are now a larger portion of total project tenders, particularly in the residential sector.

Material Costs: Navigating Stability and the "Green Premium"While global energy prices have eased, resulting in more stable prices for energy-intensive materials such as steel and glass, the market in 2026 will see a divergence in the costs of different building materials.

1. The Concrete Reality
Concrete remains a central source of inflation. The ongoing effects of the Concrete Products Levy, originally introduced at 5%, continue to be felt. Since concrete is essential to nearly every Irish building project, even minor cost increases will significantly impact overall project "hard costs." Energy price instability on account of the Middle East conflict will have significant impact on construction costs.

2. The "Green" Shift
There is a widening price gap between traditional building materials and their low-carbon alternatives. With stricter building regulations around carbon emissions, demand—and consequently prices—for sustainable timber, high-spec insulation, and carbon-neutral cement have increased. Prices for insulation and glazing remain high due to competition between deep retrofitting and new-build projects. Mechanical and electrical systems, such as heat pumps and advanced ventilation, have seen a 4–6% price increase in 2025, driven by global demand and the need for skilled installation labour, while copper, which touched an all time high at $14,527.50 a metric tonne on 29th January is forecast to remain high and volatile in 2026. 
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Outlook: Resilience Amid High Costs
Despite ongoing inflationary pressures, the sector is still resilient. The National Development Plan continues to inject significant funding, and the Society of Chartered Surveyors Ireland (SCSI) reports that, although tender prices are still rising (2.5% in 2025), the pace has become more predictable, with mid-single-digit increases rather than the volatility experienced in 2022 and 2023.

For both developers and homeowners, early procurement and the securing of fixed-price contracts are the primary strategies for mitigating the impact of upcoming Q3 wage increases.