Tender price indicator
As the impact of Brexit remains uncertain, the construction industry has been resilient with continued demand for work outstripping supply.
Forecasts for early 2017 show continued growth and increases in tender pricing, albeit the latter part of 2017 and early 2018 is slowing.
2016 ended on a high with 6% annual average increase in pricing recorded in London and 4% increase across the UK.
Our forecast for 2017 is 2% in London and 2.5% UK average, provided the Brexit plans maintain demand for construction output.
The pass through of the weaker pound is affecting the cost of imported materials upon which the industry is dependant. With uncertainty in Europe this could easily be reversed. 2019 will be the date for actual exit from the European Union after which the whole of the UK’s trading landscape will have changed. What this landscape will look like remains unclear.
Construction input costs are recording their highest level for five years, driven largely by materials and commodities but with continued pressure from wage rates. The majority of indicators have recorded 2% to 2.25% annual growth in building cost input and 2.5% to 3.5% growth in mechanical and electrical cost input.
The Consumer Price Index (CPI) measure of inflation rose to 1.2% in November, up from 0.9% in October, the highest rate since October 2014.