Collecting, collating and interpreting information on behalf of surveyors for more than 50 years.
11 JUN 2019
Over the next five years (to Q1 2024) tender prices are expected to rise by 28%.
The forecasts have been revised in line with the delay in Brexit until October 2019.
Tender prices are forecast to rise by 4% per annum over the first two years of the forecast period, by 5% over the following year, then rise by an annual 6% over the remainder of the forecast period.
Building costs are forecast to rise by 21% over the forecast period, by 3% over the first year of the forecast period, by 4% per annum over the following two years, then by 5% and 4% respectively over the final two years of the forecast period.
Construction materials prices are expected to rise by between 2% and 4% per annum over the forecast period.
It is anticipated that the average of wage awards will be around 3% over each of the first two years of the forecast period, rising by 4% over the third year of the forecast period, then rising by 5% per annum over the final two years.
It is assumed that modest growth in new work output will ensue for 2019, with output picking up in 2020. Strong growth is expected over the following three years, driven primarily by very strong growth in the infrastructure sector, aided by growth in most of the remaining sectors, with a recovery expected in the private commercial sector from 2022. Over the five years 2019 to 2023, new work output is expected to rise by 22%.
There is still a great deal of uncertainty over the terms that will be agreed when the UK leaves the European Union.
While almost any outcome is still possible, BCIS will continue to produce forecasts based on three scenarios; these reflect the different outcomes from the exit negotiations from the EU and are equally likely. The uncertainty of the results of the Brexit negotiations will undoubtedly lead to BCIS revising its assumptions again as more is known.
In all scenarios, it is assumed that there will be no change of UK government over the forecast period, and that there is political stability in the rest of the world. A gradual rise in interest rates puts pressure on consumer spending.
Although a 'no deal' is currently being discussed as an option, this may encompass a raft of specific deals and has therefore increased the range of possible outcomes. A specific forecast for this option has not been carried out. However, the likelihood is that a 'no deal' would tend towards the downside scenario.
Full details of our market assessment and forecast of demand, cost and prices are published in the 'Briefing' section of BCIS online.