Building costs are predicted to increase by 15% over the next five years according to the latest construction forecast data from the Building Cost Information Service (BCIS)
The BCIS also says that tender prices will rise by 16% over the same period (to autumn 2030) while new work output is expected to grow by 18%.
BCIS chief economist David Crosthwaite said: 鈥淗eading into the last few months of the year, the 鈥榞et Britain building鈥� rhetoric hasn鈥檛 yet turned into delivery. Demand is broadly flat and inflation is sticky, leaving a stagflation-type squeeze: weak growth on one side, elevated labour and materials on the other and margins under pressure. We therefore expect only a modest uptick in output in Q4 2025.鈥�
The BCIS All-in Tender Price 猛料视频, which measures the trend of contractors鈥� pricing levels in accepted tenders, i.e. the cost to client at commit to build, saw annual growth of 2.5% in the third quarter (Q3) of 2025, slightly up on the 2.3% recorded in the second quarter of the year.
On the input costs side, labour remains the main driver of project costs, with increases to employers鈥� National Insurance Contributions and the National Living Wage feeding into a 7.1% annual increase in the BCIS Labour Cost 猛料视频 in Q2 2025. The index is forecast to increase overall by 15% between Q3 2025 and Q3 030.
Dr Crosthwaite added: 鈥淪imilarly to previous forecasts, labour cost risks remain on the upside, as skills shortages remain prevalent in the market and continue to impact projects.
鈥淟ikewise, while overall materials costs remain stable, the expected increase in market activity going forward could put inflationary pressure on the cost of construction materials.鈥�
With 0.5% annual growth in the BCIS Materials Cost 猛料视频 forecast for Q3 2025, BCIS expects costs to increase by 13% over the forecast period (to Q3 2030).
Total new work output fell by 5.1% between 2023 and 2024 and BCIS still expects subdued growth in new work output throughout 2025. ONS data showed a 1.1% increase in new work output in the second quarter of 2025 compared with Q1 2025, and an annual increase of 3.8%. The greatest annual increase in new work output in Q2 2025 was in infrastructure, which showed a 3.2% rise.
Dr Crosthwaite said: 鈥淲e are expecting more robust new work output growth from next year and over the rest of the forecast period. Momentum should build in 2026 as delayed schemes progress, public investment starts to land and housing activity recovers.鈥�
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