Bid prices could be set to rise as soon as next year, according to the latest tender price consensus from H&V News’ sister magazine Construction News.
This is an improvement on the previous consensus at the end of October that a rise wouldn’t come until 2012.
The latest amalgamation of forecasts from eight cost consultants and the Building Cost Information Service shows tenders rising 0.8 per cent in 2011 and a 2.5 per cent rise in 2012.
The previous consensus view had been for a 0.2 per cent drop in 2011 with a 1.9 per cent rise the following year. The revision means tenders would be higher at the end of 2012 than previously thought.
Commentators believe the end of recession in the UK will boost consumer confidence and lead to an increase in work for construction firms that will see growth in tender prices from the end of 2011.
But the latest consensus also predicts a more aggressive lowering of tender price forecasts
in the meantime. For the first time, the consensus also gives an indication of what the situation will be like in 2013 – when prices are expected to have recovered about half the fall they experienced this year and last.
The latest consensus view is for a 13.3 per cent fall in 2009 and 2010, with a recovery of seven per cent over the following three years.
Gardiner & Theobald made one of the biggest revisions to its forecast for last year and 2010. While the Office for National Statistics indicated a two per cent rise in Q3 2009 output, Gardiner & Theobald said this was just a blip.
The firm’s December 2009 forecast indicated a further decrease in 2009 and 2010 tender
levels, with lack of demand reflected in pricing.
But like most, G&T forecast that 2011 would see a return to positive pricing as activity increased.
The BCIS significantly revised down its tender price index for 2009. It said the market was still weak, helping to drive down tender prices.
The BCIS general building cost index showed that costs fell a total of one per cent in 2009, the first year-on-year fall since the series started in 1978.
BCIS executive director Joe Martin said: “The drop in costs is due to falling material prices and a pay freeze for many construction workers.
“However, falling costs will only bring limited relief as tender prices are expected to continue to fall through to the end of 2010 while demand remains weak.”