Tender price indicator
Our Tender Price Inflation report looks at the movement of prices in tenders for building controls in the UK.
The report examines a number of contributing factors including GDP, sterling, oil price, employment levels, input costs and construction output. This is further informed by our market survey responses and contractor consultations.
As UK economic growth slows, the construction industry remains resilient albeit at reduced levels of growth.
Faced with lack of clarity on Brexit and upward pressure on pricing, forecast demand for construction continues but at a slower rate than 2107. Against this back-drop we have left our UK average tender price forecast for the next three years unchanged from our last review.
London remains flat at 1% for 2018 and 0.50% for 2019, with reductions to 1.0% and 1.5% for 2020 and 2021. Against our regional forecasts the majority of UK regions remain unchanged, but the North, Scotland and Yorkshire are all down. The North West bucks the trend with forecast increases to 2.5% in 2018 and 2.0% in 2019.
Into 2022 we forecast a return to a normal growth market and have adopted our long-term average tender inflation rate. However our forward order survey is illustrating a reduction in demand and limited orders compared to our last quarter survey.
Our forecasts take account of all sectors and all project sizes as a statistical average indicating an overall trend in pricing levels. It should be remembered that individual projects may experience tender pricing above or below the average rate, reflecting the project specific components and conditions.
Building cost indicators recorded further increases in the first quarter of 2018, through a combination of new year price rises and pass through of sterling depreciation on restocking.
UK economic growth slowed in the first quarter of 2018, with GDP down to 1.2%, both services and construction reducing output effecting headline figures.