Build costs forecast to drop further

'The latest tender price forecast from the RICS Building Cost Information Service sees construction prices continuing to fall this year and through 2010, with no growth expected until 2011. As for a return to pre-recession price levels, BCIS says this is likely to be beyond its forecast period, which looks five years ahead.

Prices are expected to decline by 5.2% this year and at the more modest pace of 1.8% during 2010. However the forecasters point out that if the recession drags on for longer than is currently predicted, or if public spending is significantly cut, then price growth would not appear until 2012 after four years of falls.

'Despite seeing slightly more positive data coming from the construction sector in recent months with output starting to fall at a slower rate, it is evident that the fall in tender prices will continue,' says Joe Martin, BCIS executive director.

Source: RIBA Practice No. 515 - 8th October 2009