Construction Costs News:-Building costs are forecast to rise by 20 percent over the next five years, according to calculations by the Royal Institution of Chartered Surveyors’, RICS, consultant panel.
The is set against a backdrop of increased new work output activity of 21 percent from 2019 to 2023 claims RICS’ business construction information service, BCIS.
BCIS predicts a 3 percent rise over each of the first two years, then a 4 percent rise in the third year followed by a 5 per and 4 percent increase in the final two years.
Construction materials prices are expected to rise by between 3 percent and 4 percent per annum over the forecast period.
The average wage award is expected to be around 3 percent per annum over the first two years, rising by 5 percent over the following two years and by 4 percent over the final year.
A BCIS spokesperson said: “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 21 percent.”
Developers will need to gauge business plans accordingly
Brokers Hank Zarihs Associates said SME builders should factor increases in labour and material costs when applying for construction loans and property development mortgages.
Tender prices are expected to rise by 27 percent over the next five years with a 3 percent increase in the first year of the forecast, a 5 percent increase over the following two years and a 6 percent raise over the final year.
Although BICS said the uncertainty over the outcome of Brexit negotiations could mean a revision on current assumptions.