The pre-recession peak of 2007 will be surpassed during 2016 for total new work output in the UK, while tender prices in the UK will rise between 4% and 6% per year in the next five years, the latest report from the Building Cost Information Service (BCIS) has predicted.

BCIS, part of RICS (the Royal Institution of Chartered Surveyors), reported that tender prices in the UK had risen by 0.8% in the first quarter of 2015 compared with the previous quarter, and by 4.5% compared with the same quarter in 2014.

The BCIS report predicted that annual tender price increases would moderate in 2015, as contractors start to cope with increasing workloads.

It said that materials prices had fallen by 0.4% in the first quarter of 2015 compared with the previous quarter, but remained unchanged compared with the first quarter of 2014.

Little movement is predicted in materials prices in the remainder of 2015, it said, with domestic and Eurozone inflation very low. However, it is expected that prices will start to rise again in 2016.

Over the following few years, as both the construction and wider economies improve, BCIS felt that upward pressure was likely to increase materials prices from 2.6% in the year to the secondquarter of 2017, to 4.1% in the year to the second quarter of 2019.

It is forecast that strong growth in new work output will continue in 2015 and into 2016, with increases of 5% predicted in both years. BCIS said that total new work output would surpass the pre-recession peak of 2007 during 2016, and would be in the order of 15% higher than that 2007 peak by 2019.

Over the five-year forecast period, the BCIS estimates that new work output will have grown by around 20% since 2014, largely as a result of continued demand in the private housing sector, private industrial sector and private commercial sectors. However, growth is expected to moderate to 3% in 2017, rising faster at a rate of 4% in 2018 and 2019.

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