Thefts from building sites are not a new phenomenon. But the recent robbery of €2,000 worth of insulation boards from a site in Clonmel, Co Tipperary, shows just how valuable basic building materials have become.

Just as Covid had started to loosen its grip on supply chains, the energy crisis and the war in Ukraine have added another layer of inflation.

Patrick Atkinson, the CEO of builders merchants Chadwicks, told Prime Time that building materials that come from Russia and Ukraine, or products made using energy-intensive production processes, are continuing to see price increases.

Rough timber costs 64% more than it did 12 months ago, according to the Central Statistics Office. Plaster is a third more expensive, while the price of steel and reinforcing metal has risen by 27%.

A spike in the cost of MDI – a key raw material used in plastic piping and insulation – is also having an impact on products that hadn't been as badly affected by the pandemic.

Insulation, as the Tipperary thieves recognised, is now a valuable commodity. Rolls of attic insulation that used to cost €40 are now sold for €60 – a 50% increase in just 18 months.

"I was talking to one supplier yesterday who told me his energy costs have gone up threefold in the last 12 months," Mr Atkinson said.

Chadwicks has 40 stores around the country and insists its stock levels are very good. The problem, for customers at least, is how much it all costs.

Building materials can account for as much as 20% of the cost of a developer-built home

Contractors are now taking steps to make sure they’re not left out of pocket. Some builders are refusing to quote a price for a job until they are on site and ready to go. Others are buying all of the materials for a project upfront – something that would have been unheard of before.

In other words, they are hedging against possible inflation, Mr Atkinson said.

Retailers like Chadwicks aren’t necessarily benefiting from price hikes, the CEO explained.

"We’re not passing on all of the increases. We’re actually taking a bit of a hit. It doesn’t suit us for prices to be continually going up. It creates uncertainty," he said.

Building materials account for between 15% and 20% of the cost of a developer-built home.

Cairn Homes said in its latest financial results that building inflation added €15,000 to the cost of its homes last year. An additional increase of €10,000 is predicted this year.

The company, which doubled its profits in 2021, said efficiencies meant buyers paid just €2,000 more than in the previous year.

For other businesses, absorbing costs may prove more difficult. One of the country's biggest civil engineering and construction firms, Roadbridge, went into receivership earlier this month. Nobody thinks it will be the only one.

Contractors are finding it difficult to agree on a price for a job that may not start until long after material costs have gone up, Eamonn McCafferty, owner of groundworks firm Site Control, told Prime Time.

The Covid-19 pandemic had already disrupted construction industry supply chains

"We priced a project there recently, and in terms of materials, we were told by one supplier that they could only hold the price for one day. A single day," Mr McCafferty, a member of the Irish Plant Contractors Association, said.

Fuel accounts for around half of the cost of running Mr McCafferty’s machinery.

"Last January, we were paying 75c a litre. Two weeks ago, that had gone up to €1.50," he said.

"To continue on as things are at the moment could be considered reckless trading. Many companies are not prepared to take the risk – so we'd rather park up than put our business in jeopardy."

A wait-and-see approach may make business sense, but if it’s replicated on a larger scale it would be a disaster for housing supply.

"I know for a fact that developers and clients are finishing out projects that are underway, but they have no plans in the near future to continue with subsequent phases [of housing] until there's some price certainty," Mr McCafferty said.

This, he noted, could leave the Government's housing targets "in tatters".

Firms may simply stop working, MrCafferty warned.

Change is on the way for contractors working on future State projects. New contracts will allow companies to be compensated if material costs go up by more than 15%.

But, it is intended, the State could also stand to gain if the price of materials fall.

In any case, these changes will only apply to future agreements, and Mr McCafferty said it could be a year or two years before the effects are felt.

Some industry sources believe price inflation is already nearing its peak

"We need help now," he said.

Public Expenditure Minister Michael McGrath has said the Office of Government Procurement is examining whether help can be provided to construction firms working on existing public projects.

Tom Parlon, the Director General of the Construction Industry Federation, who met the minister earlier this week, told Prime Time that some firms are at breaking point.

"If something doesn't happen now, more companies will go out of business – or else they’re going to stop working."

In Ardee, Co Louth, there’s a further indication of an industry under pressure.

Richmond Homes has permission to build around 200 houses at the Bridgegate development just outside the town. It launched a phase of 12 units before Christmas, but last week it returned deposits to five buyers because of delays in getting a contractor on site.

"Once it became clear we could not stand over a definite delivery date for the houses, we immediately contacted the five affected buyers to explain the situation and to return their deposits plus costs," a company spokesperson explained.

Richmond, which is proceeding as planned with other housing estates around the country, insisted it isn’t selling the Bridgegate development to an investment fund or another buyer.

The disappointment for buyers in Ardee seems, for the moment, to be an isolated incident. But the worry in the sector is what happens if costs continue to rise.

Some industry sources believe price inflation is nearing its peak – and that the industry will soon find alternative suppliers for materials whose supply chains have been disrupted because of the war.

Mr Atkinson agreed that steel prices are "probably at the top of the market", having leveled off in recent weeks. But the CEO of Chadwicks warned that, across the spectrum of building materials, there would be further inflation for the rest of the year.

The key to the market cooling, he said, is an end of the war in Ukraine.

"Our suppliers believe energy prices would start to normalise – and that the heavy price inflation that we're seeing now, down to energy costs, would dissipate."