Latest figures from The Building Cost Information Service of the Royal Institution of Chartered Surveyors show tender prices rose a further 0.5% in the last quarter of 2010 compared to the previous three months.
The figures confirm a continuing rise in tender prices during 2010 as they recovered from the lows of the first quarter.
Experts are predicting a slow upward trend in tender prices over the coming two years, which will be driven by increases in input costs.
But sharp rises in steelwork prices, copper, lead, aluminium and oil will mean cost increases will still outstrip tender rises causing further falls in contractors’ margins.
Last year the BCIS said materials costs increased by 6.8%
Peter Rumble, Information Services Manager at BCIS said: “Tender price falls would seem to have bottomed out in 2010, with tender prices having risen over each of the last three quarters, and despite new work output being expected to fall in 2011 and 2012, it is anticipated that tender prices will continue on a slow upward trend over the next couple of years, driven by increases in input costs.
“The fate of the construction industry is very much dependent on the timing of a private sector recovery. ”