Where are building costs heading into 2024?

Keith Kelliher looks at whether or not now is a good time to break ground and what 2024 has in store for house building costs.

In this article we cover:

  • What way material prices are heading
  • Where labour prices are heading
  • What could drive up costs
  • What could drive costs down

Q: What way are material and labour prices trending? Hoping to break ground in the next few weeks.

Keith says: Stabilising but concrete levy and labour costs are flash points.

When I find that crystal ball, I can assure you that the lottery numbers would be my first port of call. There unfortunately is still a lot of movement on materials despite what the perception may be.

If you look at the latest data from the ROI Central Statistics Office, April through June has in the main remained stagnant, but we are still seeing jumps in stone (average 3 per cent rise per month in the period), concrete (5.6 per cent rise) and blocks (4.8 per cent). Steel is really the only product to drop in price and even that is minimal at a reduction of 1 to 2 per cent over the period.

Overall, across all materials, prices rose 0.6 per cent from April to June. One of the biggest issues we have is the pace at which we will see any reductions passed on.

Timber has seen no movement at all across the period from February to April inclusive but then a large drop occurred in May of close on 20 per cent and yet, the majority of builders would appear to be continuing to pay at the pre reduction levels.

This could be as a result of the stock purchases that merchants had to secure at higher prices, but many would view this as simply profiteering at a time when demand for materials is high.

Unfortunately, in the short term, prices are likely to continue to, at best, stagnate but it would be most people’s views that in the longer term prices will be forced to drop with a general reduction in work across the industry. Only time will tell.

We are expecting a sharp increase in concrete prices with the ROI government pushing ahead with the 5 per cent concrete levy. This is sure to add a significant cost to the products impacted.

On a further side note, labour prices are due to rise in the ROI construction industry on the back of sectorial employment orders in September 2023 and again in August 2024, so any reduction in material cost might well be replaced with labour increases.

All in all, if you are breaking ground in the next few weeks, I would therefore expect costs to remain where they currently sit, but you are likely to suffer the cost of the concrete levy which was introduced in September.

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Keith Kelliher

Written by Keith Kelliher

Keith is a quantity surveyor with over 20 years' experience and is the founder of Kelliher & Associates Quantity Surveyors. quantitysurveyor.ie

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