What is the story about?
What's Happening?
The Building Cost Information Service (BCIS) predicts a 15% increase in construction costs over the next five years, with tender prices expected to rise by 16%. The forecast highlights stagnant demand and inflationary pressures affecting the sector. BCIS chief economist David Crosthwaite describes the current climate as a 'stagflation-type squeeze,' with weak growth and elevated costs for labor and materials. The BCIS All-in Tender Price Index rose by 2.5% year-on-year in the third quarter of 2025.
Why It's Important?
Rising construction costs pose challenges for contractors and developers, impacting project planning and profitability. The forecasted increase in costs may lead to higher prices for consumers and affect the affordability of housing and infrastructure projects. Addressing these challenges requires strategic planning and adaptation to changing economic conditions.
What's Next?
The construction industry must navigate cost pressures while maintaining project pipelines. Public sector investment and housing activity are expected to recover, potentially boosting output from 2026. Stakeholders will need to manage fiscal ambiguity and policy uncertainty to ensure a steady flow of projects.
Beyond the Headlines
The forecasted rise in building costs underscores the need for innovation and efficiency in construction practices. As the industry faces economic challenges, adopting new technologies and sustainable solutions can mitigate cost pressures and support long-term growth.
AI Generated Content
Do you find this article useful?
