Surge in building material costs picking up pace, suppliers warn

Timber and other key building material prices are rising at a faster rate than this time last year, suppliers have warned.

Overall construction material costs surged 12 per cent in 2021, according to Martin Markey, chief executive of Hardware Association Ireland, whose members supply builders around the Republic.

“This year so far we’re pretty sure that it’s more. There are huge supply issues. It’s higher than in the first quarter last year,” he said at the weekend.

Mr Markey noted that industry figures from across Europe reported the same problems at a conference in London late last week.

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He added that demand remained strong across both Irish and European construction, despite rising material and labour costs.

Suppliers and builders had expected inflation to ease into this year, but spikes in the cost of energy and materials, including steel, a consequence of Russia's invasion of Ukraine, helped accelerate it over the past two months.

Mr Markey acknowledged that there was some easing in Irish timber supply bottlenecks caused by delays in the Department of Agriculture issuing licences.

Irish law requires permits for cutting and planting trees and building roads through forests to transport wood.

Delays issuing these licences dogged the industry for two years, but some players, including State forestry business Coillte, recently confirmed that the situation had improved.

Mr Markey said that the licensing problem showed signs of easing through last year.

However, he observed that it was not consistent. “It seemed to take a couple of steps forward and then back again,” he said.

Little relief

The hardware industry chief pointed out that importing timber from other European countries offered little relief as demand had pushed up prices there.

Coillte chief executive Imelda Hurley said in the company's annual report, published last week, that some challenges remain.

However, she noted that the department, and the Project Woodland strategy begun by Minister of State Pippa Hackett, "returned much of our forestry operations to more normalised activity levels".

High prices boosted Coillte’s earnings before interest, tax and write-offs to a record €159 million. The company paid €30 million in dividends to the State.

Inflation continues to dominate Irish construction. The Society of Chartered Surveyors of Ireland recently predicted that commercial building costs would continue rising this year after soaring 13 per cent in 2021.

The Business Post reported that rising costs had prompted contractors to defer or abandon major road projects.

The Irish Asphalt Paving Producers Association wrote to the Department of Transport warning that road builders were "unable, unwilling" or "uncertain" about proceeding with work already tendered to the State because of rapidly rising prices.

Edmund Hegarty, the association's chief executive, said very little of the work tendered for since January had been completed.