Total construction activity in Ireland declined in October, despite notable growth in housing, according to the latest data from BNP Paribas Real Estate Ireland. The BNP Paribas Real Estate Ireland Construction Total Activity Index rose slightly to 49.4, up from 49 in September. However, the index remains below the 50-mark, which signals expansion, indicating that overall activity in the sector continued to fall for the second consecutive month.
While total construction activity saw a decline, the housing sector experienced a sharp uptick. The expansion rate in residential construction reached its fastest pace since May 2022, marking a significant recovery after months of contraction earlier in the year.
John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, highlighted the resurgence in housing construction as the key takeaway from October’s performance. He noted that the housing sub-index had either stabilized or grown over the past nine months, with October seeing a substantial acceleration in growth.
This surge is partly attributed to the expiration deadlines for the development levy waiver and the water connection charge refund, which led to a surge in commencement notices filed in April and September. McCartney explained that with the paperwork completed, developers are now moving forward with the actual construction, aiming to meet the 2026 completion deadline tied to these incentives.
On the commercial side, however, activity saw a significant decline. McCartney welcomed the slowdown in office building, noting that Dublin’s office market is now well-supplied. While there is still considerable new office space under construction, new developments have largely stalled, helping to limit further increases in vacancy rates. This should allow demand to catch up over time, he added.
The report also revealed a continued rise in input costs for the construction sector, with inflation increasing in line with the series average. Despite a slight reduction in activity and new orders, sentiment in the sector remains positive, with many businesses optimistic about future construction output. Respondents expressed confidence that the demand for housing will sustain growth in the sector, with some predicting an increase in new orders in the coming months.
Employment in the construction sector also showed modest growth, marking the second consecutive month of job increases. Employment levels rose at a steady pace, reflecting ongoing optimism about the sector’s prospects despite broader challenges.