New figures from the Society of Chartered Surveyors Ireland indicate that construction tender prices will rise by 7% this year, bringing prices back up to 2008 levels.
Last year, the Surveyors said tender prices went up by 6.2%.
Earlier this week, the Central Statistics Office said general inflation is running at an annual rate of just 0.2%.
The SCSI has been compiling an index of construction tender prices (using tenders for work in excess of half a million euro) for 20 years.
After a sharp fall in 2008, tender prices have risen continuously since 2011.
Director General of the SCSI Aine Myler described the increases as unsustainable and said they may hamper the ability of the present and future Governments to deliver on the objectives outlined in the National Planning Framework and National Development Plan, launched yesterday.
"These are significant rate increases and are simply not sustainable in the medium to long term," she said.
She added: "The growth in employment and housing that underlies the National Development Plan means we’ve got to deal with pent-up demand in the residential sector while also addressing infrastructure and future commercial needs.
"These demands will stretch the viability and affordability of all projects, both private and public.
"The Government needs to help push the construction industry to be more efficient and look at areas where it could be adding to those costs. Success is measured in what you build, not what you spend."
Ms Myler said: "These increases are being driven by a strong pipeline of work combined with an acute skills shortage, leading directly to increased costs. Development and construction companies are finding it more and more difficult to recruit skilled and unskilled labour. While specialist sub-contractor prices have been increasingly steadily for some time now, we are also seeing significant rate increases for traditional trades such as concrete installations, reinforcement and formwork."
She added: "One other emerging challenge is the shortage of sites for the licensed disposal of construction waste. This is a particularly acute problem in Dublin and its immediate surroundings.
"This is also driving up construction costs and is unlikely to be resolved any time soon."
