Tender prices dip 2.4pc as costs rise

Tender prices in the UK have been reduced by 2.4 per cent in the first three months of this year, according to recent research.

Figures from the Royal Institute for Chartered Surveyors (Rics) have shown that, through fear of a reclining market and the credit crunch, tender prices have dropped a significant amount in just one quarter.

This comes also as Rics reported that the cost of construction has risen 1.1 per cent in the same period, thanks to rising fuel and energy costs.

Although tender prices are set to rise in line with a stronger economy, there are fears that a fall in public sector tenders will suppress tenders once again.

The Building Cost Information Service Tender Price Index shows that public sector demand is still healthy, although could drop later this year, and remain low until 2010, causing a serious headache for construction firms.

Home sales for the month of June reached a 70 per cent drop year on year, hitting a ten-year low of just 36,000.

Such figures will put pressure on the government to balance its plans for housing expansions, promised at 300,000 per year.