Housing recovery and expanding workforce support outlook, while major infrastructure pipeline increases focus on delivery and capacity

Arcadis, the leading global design and consultancy firm for natural and built assets, today released its Autumn 2026 Ireland Market View Report. The latest analysis finds that Ireland’s wider economy remains resilient, while its construction sector presents a more mixed picture. Housing is returning to growth and the medium-term infrastructure pipeline continues to expand, although non-residential construction has contracted sharply during the year.

Budget 2027 increases capital investment by €1.1 billion, while the Government’s updated National Development Plan (NDP) Construction Pipeline sets out €102.4 billion of departmental capital allocations between 2026 and 2030. However, the scale of investment alone will not determine the pace of construction activity. Planning, approvals, procurement, governance and supply-chain mobilisation will all play an important role in determining how quickly committed investment translates into deliverable projects.

Construction and housing recovery

Construction output grew by just 0.4% in real terms, reflecting a mixed performance across the sector. There are signs of uneven recovery. Residential construction recorded annual growth of 5.5% in Q2 2026, after contraction in 2025. However, non-residential building activity fell by 9.7%. Recently, the AIB Ireland Construction PMI has recorded three consecutive months of growth, its longest streak in positive sentiment since early 2022, suggesting a more broadly based recovery.

This can be most clearly seen in the housing market. Planning approvals rose by 60% year-on-year in Q2 2026, while starts reached an annualised 30,000 in August. Measures announced in Budget 2027 will support further growth, including €9.1 billion of housing funding. This includes €3 billion for 11,250 new-build social homes and €225 million for the Housing Infrastructure Investment Fund.

Investment pipeline shifts focus to delivery

The updated NDP Construction Pipeline identifies €102.4 billion of departmental capital allocations for 2026 to 2030, including a total of €24.3 billion for transport and €12.2 billion for water once voted and non-voted funding streams are combined. Major programmes including MetroLink, DART+, Greater Dublin Drainage and the Water Supply Project for the Eastern and Midlands Region will contribute to future demand.

However, delivery remains a key challenge. Government capital spending was €0.9 billion behind profile in August 2026, equivalent to 9.2% of annual spend. The overlapping delivery of major programmes across transport, water, power and housing also has the potential to increase competition for contractors, consultants and specialist resources as activity accelerates.

Costs and capacity remain in focus

Average construction material price inflation reached 3.3% in the year to July 2026, with asphalt and bitumen experiencing particularly strong increases and rebar and in-situ concrete both around 10% higher year-on-year. Further price movement could emerge as higher input costs feed through.

At the same time, construction has been Ireland’s fastest-growing employment sector, with the workforce reaching 159,300 in Q2 2026, up over 10% in the past 12 months. The additional capacity should help support the recovery, although labour demand is expected to increase as activity strengthens.

Arcadis maintains its annual building construction price inflation forecast of 3-5% in 2026 and 4-6% in 2027, with the range widening to 4-7% in 2028 as increased NDP workload, energy and material costs contribute to inflationary pressure.

Fintan Kenny, Senior Commercial Director at Arcadis, commented:

“Ireland’s construction market is moving into a new phase. After a year of relatively flat activity, the recovery in housing and an increasingly visible infrastructure pipeline point towards stronger demand from 2027. Now that the investment has been secured, the challenge is focused on converting hope and expectation into tangible construction workload.

“Ireland has strengthened its position through a rapidly expanding construction workforce, but the scale of planned investment means that clients will increasingly be competing for specialist skills and supply-chain capacity. Earlier engagement with the market, realistic procurement and effective programme sequencing will be critical if Ireland is to translate its investment commitments into the housing and infrastructure the economy needs.”