Construction activity increased in June for the second month following the full reopening of the sector at one of the strongest rates in more than two decades.

The Ulster Bank Construction Purchasing Managers’ Index (PMI) remained well above the no-change mark of 50 in June, registering a 65.0 after an even stronger result of 66.4 in May, indicating strong expansion in the sector.

“Building on the post-lockdown bounce recorded in May, the June results of the Ulster Bank Construction PMI signal that Irish construction activity experienced another month of very rapid growth last month,” said Ulster Bank chief economist Simon Barry.

“The headline PMI was at one of the highest levels in the survey’s history for the second consecutive month, albeit down marginally from May.”

Housing construction led the snap-back with a strong increase in activity of 68.8, followed closely by commercial building at 63.8. Civil engineering activity grew less robustly at 57.7, but still well-ahead of standstill.

Employment in the building sector and purchasing grew for the third month in a row as customer demand and new activity drove continued expansion.

Ulster Bank said companies were optimistic activity would continue to rise over the coming year as the economy reopened further, although many expressed concern about rising input costs and inflation in the prices for materials due to the pandemic and Brexit supply chain disruptions.

“While the signals of ongoing strength in activity are certainly encouraging, the rate of input cost inflation accelerated to a second consecutive record high as the June survey results highlight that the sector continues to face important supply-chain and cost challenges related to Brexit, Covid and global supply and shipping problems,” said Mr Barry.

Meanwhile, appetite for residential property pushed up Irish land sales in the first half of the year by 15pc versus 2020 to €193m, according to data from Savills Ireland.

Turnover in the first six months of last year reached €167m.

Residentially zoned land sales accounted for more than 75pc of the 2021 total, suggesting developers are focusing on the tight housing market for opportunities.

“With strong activity in the residential market in the first half of 2021, it is unsurprising that the majority of the land sold had residential related zoning,” said John Swarbrigg, director of development land at Savills Ireland.

“Indeed, it is likely that the strong growth in house prices helped to drive demand for residentially zoned land.”

Savills said sites with full planning permission were trading at a greater premium than in the past as one-third of permissions under the Strategic Housing Development (SHD) process were going to judicial review.

Mr Swarbrigg welcomed steps being taken by the Government to reform the SHD system, but said in the meantime financiers and developers were unwilling to take on planning risks.

He also said requirements to build at high density, even in areas outside Dublin and other cities, was holding back development in non-urban areas and contributing to the supply imbalances in the country.