Wage pressure will continue to drive construction costs higher this year, according to the Society of Chartered Surveyors Ireland.

Its latest Tender Price Index shows construction tender prices increased by 2.6% in the first half of 2017.

According to the index, the upward trend – which has been evident since 2011 – is set to continue with a rise of 3.6% predicted for the next six months.

The Society said the forecast will give an annual increase of 6.2% for 2017 as a whole which is similar to the 6.3% recorded for 2016.

This would bring prices back to the level they were at in 2004.

Chairman of the Quantity Surveying Professional Group of the SCSI Kevin James said wage pressures would continue to drive prices higher.

Mr James said: "The increased level of construction activity is leading to a shortage of resources across multiple trades for both main contractors and specialist sub-contractors while exchange rate fluctuations between the euro and sterling due to Brexit have also increased the cost of some materials.

"Looking ahead the increasing pressure for wage increases in the industry will also drive tender prices higher."

According to the SCSI’s research, the price increases reflect the increasing level of construction activity we are seeing across the country, but especially in the Greater Dublin Area (GDA).

In Dublin tender prices increased by almost 3% (2.96%) in the first six months, followed by Munster at 2.65%, the rest of Leinster at 2.56% and Connacht /Ulster only showing an increase of 1.5%.

For the second half of the year the association is forecasting a rise, on average of 3.6% with Dublin again showing higher rates.

Mr James said it was inevitable that the rise in tender prices would have a knock on effect on house building costs.