Ireland construction output forecast to grow 4% in 2026 as AECOM warns delivery readiness is the real constraint
AECOM forecasts 3% tender price inflation while housing completions continue to fall well short of demand despite €5.2bn housing allocation
Thursday 13th January | 📧 editor@breakingground.news
Ireland’s construction industry is forecast to record output growth of approximately 4% in volume terms in 2026, with tender price inflation expected to average 3%, according to AECOM’s Ireland Annual Review 2026. However, the report concludes that delivery readiness – rather than funding – is now the defining challenge facing housing and infrastructure delivery in the State.
The review finds that while economic conditions remain broadly favourable and public capital investment is at record levels, structural and capability constraints across the delivery system continue to limit the pace and scale of construction activity. Residential completions are expected to remain well below underlying demand, prolonging the housing crisis despite strong Government intervention.
AECOM highlights that Budget 2026 allocated €5.2bn to housing, alongside continued growth in overall capital spending. The Government has also established the Accelerating Infrastructure Taskforce, which published its Action Plan in December 2025, setting out proposed reforms to address legal, regulatory, coordination and delivery barriers. The report notes that many of these measures are still at an early stage of implementation, meaning systemic delays persist.
According to AECOM, public and private sector projects continue to face complex, sequential approval processes, with multiple gateways, extended statutory timelines, appeals and judicial reviews contributing to prolonged delivery periods and heightened uncertainty. These conditions, the report warns, risk discouraging international contractors from entering the Irish market and may accelerate the outward movement of domestic contractors and consultants.
The residential sector remains the single largest component of construction output and a critical driver of overall activity. While Government initiatives – including Land Development Agency interventions and increased capital funding – are designed to support supply, AECOM identifies ongoing viability challenges, constrained private investment, and deficits in enabling infrastructure such as water, energy and transport as key barriers to converting planning permissions into completed homes.
AECOM defines “readiness” as strategic preparation across the delivery ecosystem, encompassing internal organisational capability, skills, systems and governance, as well as external factors such as procurement strategy, pipeline certainty and workforce planning. The firm argues that strengthening readiness is essential to managing constraints, accelerating timelines and delivering Ireland’s housing and infrastructure programmes at scale.
The review concludes that with strong public finances, continued private sector interest and a resilient construction base, the foundations for delivery are in place. Unlocking that potential, it states, will depend on a sustained focus on readiness across clients, agencies and the wider construction supply chain to translate investment into built outcomes at pace.
