A surge in construction activity in the third quarter of this year has resulted in labour shortages, according to a report by Deloitte.
As Covid-19 restrictions lifted, the report reveals that building activity in both the residential and commercial sectors increased.
However, this resulted in rising costs on building materials, related to Brexit and supply issues throughout the continent.
The latest Society of Chartered Surveyors Ireland tender index has shown that costs rose by 7% nationally in the first half of 2021.
"At a time when house prices have increased by 12.4% annually - as per the latest CSO Residential Property Price Index - these increased costs could push house prices even higher, but ultimately there is a ceiling at which potential purchasers can afford to buy," said John Doddy, Partner at Deloitte Real Estate Advisory.
"These increased costs, coupled with a ceiling on affordability, could lead to viability issues on development sites," he added.
The Deloitte report reveals that the number of planning applications submitted during the third quarter of the year is down 29 schemes compared to the second quarter of the year, but, in terms of overall units, this is up 16%.
"This is most likely a direct result of developers preparing for the reopening of the sector," said Mr Doddy.
"This trend is continued, with granted schemes down 13%," he added.
Meanwhile, commencement notices were down in the third quarter, but Mr Doddy said that is no surprise.
"This is to be expected given the release of the pent-up, shovel-ready sites, once the industry opened back up after the relaxation of restrictions earlier this year," he said.
Similar to the previous quarter, the report reveals that there remains a steady shift away from apartment development, which has resulted in an increased number of housing developments in both the Greater Dublin Area and the rest of Ireland.
According to the report, the office sector also witnessed increased activity throughout the third quarter.
A larger portion of office development commencements are beginning to be seen outside of Dublin.
One-third of large-scale office developments commenced in the third quarter were in Dublin, while one-third were in the rest of Leinster and one-third in the rest of Ireland.
