Latest figures from the Building Cost Information Service of RICS show tender prices still fell during the year to March despite nationally agreed wage rates rising 1.9% and materials costs increasing by 1.7%.

Most contractors quizzed by the cost experts are expecting tender prices to remain static over the next six months.

Peter Rumble, Information Services Manager at BCIS said: “There are some concerns that private sector output growth will not have gained enough momentum in time to outweigh the cuts in public spending; a scenario that could lead to a ‘double dip’ or prolonged recession in the construction industry.

“However, currently BCIS is expecting a further small fall in tender prices in Q2 2010 followed by a stagnation in prices for the remainder of the year.

“A small rise in tender prices is expected in the year to Q2 2011, rising more or less in line with input cost increases over the following year, as a slow recovery in new work output gets underway.”