The boom in construction activity is to accelerate this year and will remain at historically high levels in 2000 and 2001, according to the annual review of the construction industry. The volume of construction output grew by 8.5 per cent in 1998 and is estimated to grow by almost 13 per cent this year. The growth is estimated at 10 per cent in both 2000 and 2001. The review, however, expressed concerns about the shortage of labour and said the "downside is that undesirable inflationary pressures are emerging". Construction output will have doubled by the end of 1999, far outstripping the average growth of one per cent to two per cent in the EU. The main challenges facing the industry "are the prevention of overheating and how to increase building capacity to cope with the boom in the economy and in investment, which is set to continue over the medium term", Mr Dempsey, Minister for the Environment and Local Government said. He noted that there are indications that the construction industry is now working at close to full capacity. Fewer contractors are bidding for individual projects, more contractors are looking for extensions of time to formulate bids, as they are busy with ongoing projects, and tender prices, escalating at 8 per cent to 12 per cent, are much higher than the trend in inflation, according to the review.
Commenting on the review by his department, he said "with the cost of materials remaining relatively stable, it is clear that other cost increases are responsible for the unsustainable price increases which are occurring".
Noting that the National Development Plan, 2000-2006, will make major provision for further infrastructural development, Mr Dempsey stressed the Government "cannot contemplate a situation where increased capital investment is not used productively but simply flittered away in increased prices".
Mr Dempsey outlined the main initiatives taken by the Government together with the construction industry. These included the opening up of an additional 100,000 zoned sites for housing development over the period 1999 to 2001, and the FAS/CIF initiative which has doubled in annual intake of apprentices.
He said he will continue to encourage a further expansion in capacity. "Towards this end, I will be asking the broadly based Forum for the Construction Industry to give added urgency to their consideration of measures which might be taken in both the short and long-term to expand building capacity". This, he added, "is crucial if the expanded volume of investment foreseen under the forthcoming National Development Plan 2000 to 2006 is to be delivered in a timely and cost efficient manner, and we are making real progress towards providing affordable housing for 400,000 to 500,000 households over the next 10 years or so".
The review also found there is strong growth across all sub-sectors of the building industry. The strongest growth is in the housing sector where a record 42,500 new houses were completed in 1998. The review estimates that this will rise to 44,500 this year. The number of dwelling completions in the social housing sector was 3,000 in 1998. That represented a 10 per cent increase on the previous year.
Direct employments in construction is estimated to have reached 150,000 by the second quarter of 1999. This is predicted to grow by a further 10,000 by the end of this year. Total employment is estimated at 224,000. That would represent one in seven of the 1.5 million people at work.
