Commercial Property News

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Monday, October 10, 2023

BCIS Tender Price Index

Steady Increase in Tender Prices in 2nd Quarter 2005

The price of new construction work rose a little faster than general inflation between 2nd quarter 2004 and 2nd quarter 2005, according to the latest Tender Price Index compiled by BCIS. However, the annual increase in tender prices is distorted somewhat by the large increase in tender prices in 2nd quarter 2004.

Looking forward, new work output growth is now expected to rise well behind trend in 2005, with new work output in the first half of the year falling by 2.2% compared with the same period in 2004. It is anticipated that growth in new work output will move a little ahead of trend in 2006, before rising significantly above trend in 2007. The main growth sectors are likely to be the public non-housing sector, and the private commercial sector as a result of PFI schemes reaching site and an improving offices sub-sector. Olympic based construction should also start to boost output from 2007. The forecast is based on the assumption that there will be an expeditious release of public funds.

Peter Rumble commented: 'With quite strong upward pressure from input cost increases, and with new work output expected to grow a little faster than trend in 2006, tender prices will rise well ahead of general inflation between 3rd quarter 2005 and 3rd quarter 2006. Over the second year of the forecast, input cost increases are expected to slow somewhat, but with new work output growth anticipated to be well ahead of trend in 2007, tender prices are forecast to continue to rise significantly faster than inflation.'