Tender prices for new construction work may not start rising until 2011, and won't return to pre-recession levels during the forecast period, says the latest five year forecast from the BCIS the Building Cost Information Service of the RICS.

Tender prices are predicted to fall 5.2% in 2009 and a further 1.8% in 2010, before returning to 3.3 percent growth in 2011. Such decreases will be a result of sharp declines in new work output through 2009, with slower falls expected in 2010 before returning to modest growth in 2011.

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However should the recession in housing, industrial and commercial in the private sector be more drawn out than predicted in the central forecast, with growth not returning until 2012, then the price of new construction work will continue to fall through 2011 at a rate of 1.9%.

A cut in public spending would have a similar effect on tender prices, meaning tenders would suffer around a 15% peak to trough fall over a period of four years.

Such cuts would also see the rate of growth in tender prices, once it comes, move more slowly.

If public spending in construction were to be cut by 10% per year between 2011 and 2013, then tenders would only rise by around 7.5% over the two years, 2012 to 2013, compared with around 9.5%in the central forecast.

(CD/BMcc)