Tender prices for construction work are expected to rise significantly faster than inflation over the next five years, says the Building Cost Information Service (BCIS).

It predicts that the main stimulus for growth will come from the private commercial sector, primarily through demand for office space, PFI schemes and 2012 Olympics venue work.

Tender prices are expected to rise by more than two-and-a-half times the rate of inflation over the next five years, that is, by 34% compared with a 13% rise in general inflation.

Reliance for output growth is likely to lie more heavily on the private sector over the next few years

Andrew Thompson, BCIS

Peter Rumble, the body’s information services manager, said: “With new-work output expected to rise above its long-term annual trend rate in four out of the next five years, and with pressure from input cost rises, it is anticipated that tender prices will rise significantly above inflation over each year of the forecast.”

Andrew Thompson, international development director of BCIS, said: “With the government expected to put the squeeze on public funding in the Comprehensive Spending Review 2007, and with more schemes procured through PFI etc, reliance for output growth is likely to lie more heavily on the private sector over the next few years.”

Postscript

House prices were unchanged over August, the lowest rate of monthly growth for 20 months, according to the latest national housing market survey from Hometrack, the housing intelligence business. This is the fifth consecutive month of slower house price growth.