UK construction prices could rise 17% over the next 5 years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Particularly over the last few years, construction prices have increased dramatically; 2022-2023, for example, was considered to be a particularly ‘bleak’ and ‘dark’ period for the construction industry as material prices soared and new order growth didn’t quite hit expected heights.

So, what does 2025 and indeed the next 5 years have in store for the construction industry?

Rising building costs and tender prices

According to recent forecasts, the UK construction industry is expected to experience inflation in 2025 and over the next five years, where building costs are predicted to increase by 15-17%.

This expected and especially steep rise in costs is driven by factors such as:

• Supply chain disruptions

• Labor shortages

Reflecting these increases, and alongside, tender prices are also predicted to rise even further, to approximately 18% over the same five year period.

However, not all is lost as some forecasts do go on to suggest that the rate of price increases might actually slow down in 2025 compared to previous years.

A rise in construction output

What’s more, there is a general sense of hope woven through many construction forecasts published recently that suggest, overall, total construction output is forecast to rise by 2.5% in 2025, and a further near 4% (3.8%) in 2026 after falling by 2.9% in 2024.