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Construction drops despite housing surge

A survey of the construction industry indicates that activity in the sector fell in October for the second month in a row, despite strong growth in housing. 

The BNP Paribas Real Estate Ireland Construction Purchasing Managers' Index (PMI) recorded 49.4 – up marginally from 49 in September. Any figure below 50 signals a drop in activity. 

Firms reported that new orders fell for the first time in eight months, while costs continued to increase sharply.

Confidence among companies in the sector increased, however, with some predicting a renewed increase in new orders, and others highlighting confidence in demand for housing. 

Deadlines 

The housing sector recorded 56 in October – its highest figure since May 2022. Commercial (47) and civil engineering activity (39.7), however, were both well below the key 50 mark. 

John McCartney (director and head of research at BNP Paribas Real Estate Ireland) highlighted the surge in residential construction, which had fallen continuously throughout 2023. 

“Deadlines to avail of the development-levy waiver and the water-connection charge refund drove sharp spikes in the number of commencement notices filed in April and September respectively,” he stated.  

“But a condition of these incentives is that units must be completed before end-2026. So, with the paperwork done, developers are now getting on with the actual construction.” 

McCartney also welcomed the tapering-off of commercial activity, saying that it reflected a slowdown in office building.  

“Dublin’s office market is now amply supplied and, although a significant quantity of new space is still winding its way to completion, new starts have dried up. This will help to limit further vacancy increases, allowing demand to catch up in time,” he concluded.