BCIS publishes 5-year building forecast

Building Cost Information Service (BCIS) after conducting an analytics has published its view on the development of the building industry in the next 5 years. This research detail shows how will develop the building market and what will the main charge in development. Also it show which branches are the most prospective, and which will decline.

The main source: BCIS releases five-year construction forecast

How the industry will develop in the next 5 years

According to the forecast, over the next 5 years, the building cost increase by 15%. At the same time, the tender price will increase to 19%.

During 2024, a 5,5% fall is expected in the building sector. By the way, in 2025, the industry must start to grow, and by 2029 it must increase by 20%.

BCIS chief economist David Crosthwaite said: “As long as the cost of borrowing remains elevated, construction output will likely suffer continuing declines. This is especially the case in the private sector because it’s a major barrier to investment. We’ve also seen the pipeline for new orders affected by the stagnant economy.”

Labor remains one of the major causes of increasing prices. Increasing worker salaries will slow, but in the next 5 years, it shows 17%.

And the last one is building materials costs. Now it has decreased, and it will drop by 1% by the middle of 2024. But in the next 5 years, prices must increase to 14%.

What will influence the building industry?

The main reason that will influence on building industry will be uncertainty caused by future elections. Also the economic crisis caused by COVID and the war in Ukraine make an influene. But there are also other factors, like a general increase in salary and stabilization of the economy.

BCIS chief economist David Crosthwaite said: “However, with strong cross-sector wage growth, albeit to a lesser extent in construction, any expectations that we’ll see the first cut to the base rate this month have largely fallen away, and we’re now looking at August as the earliest date. “Construction activity will of course be influenced by the outcome of the general election and future spending plans, though all parties have committed to new increased housebuilding and using infrastructure as a lever for growth.”

Dr. Crosthwaite added: “The upside risk to labor costs is that wages are driven up by widely reported skills shortages, which could impact the viability and affordability of projects. The workforce is 90% of what it was before the pandemic when long-standing concerns were already about fulfilling skill requirements. “With materials, there remains an ongoing risk to price inflation due to uncertainty around disruption to trade routes in the Red Sea and conflict in the Middle East and Ukraine.”

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