Five-year forecast highlights challenging conditions
Posted: Tuesday, June 25th, 2024
According to the latest construction forecast data from BCIS, building costs will increase by 15% over the next five years, while tender prices will rise by 19% over the same period, Specification Online reported. With demand in the sector continuing to contract, overall output is expected to fall by 5.5% in 2024 compared with last year. The expected decline is mainly due to decreased output in the housing, private, commercial, and industrial sectors. However, a promising turnaround is anticipated in 2025, with total new work output projected to increase by 20% by 2Q2029. Dr David Crosthwaite, chief economist at BCIS, said: “As long as the cost of borrowing remains elevated, construction output is likely to suffer continuing declines. This is especially the case in the private sector because it’s a major barrier to investment. We’ve also seen the pipeline for new orders affected by the stagnant economy.” The BCIS All-in Tender Price Index, which measures the trend of contractors’ pricing levels in accepted tenders, i.e. the cost to client at commit to build, saw annual growth of 2.3% in 2Q2024. On the input costs side, labour remains the main driver, though annual growth in the BCIS Labour Cost Index is forecast to slow, increasing overall by 17% between 2Q2024 and 2Q2029. Annual growth in the BCIS Materials Cost Index has been in negative territory for the past two quarters and is forecast to drop further by 1% in 2Q2024. #There was a slight uptick in 1Q2024 compared with the previous quarter, and BCIS expects the index to increase by 14% over the next five years.
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