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BCIS five-year forecast - october 2021

Published: 28/10/2021

Tender prices are expected to rise steeply over the next year with sharp rises in materials costs and site labour rates, together with strong demand. Tender prices continue to rise faster than costs over the remainder of the forecast period, with prices rising by 27% over the whole of the forecast period (3Q2021 to 3Q2026).

Materials prices rose by 6.3% in 3rd quarter 2021 on a quarterly basis and by 16.9% compared with a year earlier. The materials supply difficulties are expected to stabilise by 3rd quarter 2022 and prices will rise by 15% over the forecast period (3Q2021 to 3Q2026).

Although promulgated labour rate increases have been in the order of 2% to 3% in 2021, site rates have risen sharply, rising by 10% in 3rd quarter 2021 compared with a year earlier, according to the Hays/BCIS All-in Site Wage Cost Index. This will be reflected in the BCIS Market Conditions Index, putting upward pressure on tender prices. These shortages may take over from materials shortages as the major factor affecting costs.

The BCIS General Building Cost Index rose by 4.2% in 3rd quarter 2021 compared with the previous quarter, and by 9.1% compared with a year earlier. Costs will rise by 16% over the forecast period (3Q2021 to 3Q2026).

Total new work output increased by 4% in 2nd quarter 2021 compared with the previous quarter and by 56% compared with a year earlier. New construction output will rise by 30% over the forecast period (2025 compared with 2020). This increase is exaggerated by the pandemic induced 16% fall in 2020.

The full forecast and commentary are published in the Briefing section of the BCIS Online service.

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