A report published today by DKM Economic Consultants warns about inflation in the construction sector, saying it is a "disappointing consequence of its success".
The report says that wages or earnings are rising higher than in other parts of the economy, and that construction materials price inflation grew to 5% year-on-year in February.
The report, published for the Department of the Environment, says that the housing sector continues to defy all expectations in terms of housebuilding activity, house price inflation and the volume of residential mortgage lending.
The report also shows that more than 250,000 people were employed in construction in the last three months of 2005. One in eight workers is now employed in the sector.
The construction sector now accounts for about 13% of total employment, compared with 10% at the beginning of 2000.
The report, Construction Industry Indicators, also shows that while the construction sector overall is still booming there has been a strong recovery in non-residential investment.
Building and construction investment in 2005 grew by 10%, following a 9% increase in 2004.
DKM says it's cautious in predicting the number of houses that will be built this year, because the number of "commencements", the initital stage of housebuilding, were the same in 2004 and in 2005, though in 2005 the number of completions was 5% higher.
It says that in 2005 both commencements and planning permission applications fell sharply.
