Forecast says prices will not return to pre recession levels for at least five years
Tender prices are set to fall until 2011 and won’t return to pre recession levels for at least five years according to the latest forecast from RICS.
The forecast has been prepared by RICS’ building cost information service and warns tender prices will fall 5.2% in 2009, a further 1.8% next year before returning to 3.3% growth in 2011. But Joe Martin the executive director of BCIS warns that if the recession in the housing, industrial and commercial markets takes longer to recover than predicted or there are cuts in public spending, tenders will fall instead in 2011 by 1.9%. Cuts of 10% each year on public spending between 2011 and 2013 would mean tenders would rise by 7.5% over the same period rather than 9.5% as predicted in the main forecast.
Martin said, “Any cut in the supply of public money will have a detrimental effect on any recovery. Our forecast indicates that not only would tenders keep falling for longer, but any subsequent recovery would be much slower and it will be several years before we see prices reach pre-recession levels.“