INTRODUCTION
Welcome to the Q1 2025 edition of Construction Market Intelligence, RLB’s insightful, up-to-date guide to construction activity around the UK incorporating our quarterly tender price forecast.
The RLB Weighted Average Tender Price Index forecast uplift for 2025, as at Q1 2025, is:
3.21%
Previous quarter’s forecast for 2025: 3.19%
UK construction sector poised for growth but wary of elasticity in tender pricing
Tracking of Office for National Statistics (ONS) data shows that turnover in the UK construction industry rose slightly in volume terms last year. Ordinarily that would be something to celebrate, but the underlying message in the statistics is more nuanced.
As noted in the Q4 2024 edition of Construction Market Intelligence, repair and maintenance work has been increasing in proportional terms in respect of total new work carried out. This is to say, a lesser proportion of total work volume is the new work on major projects that define the ongoing health of the construction sector.
We have passed through a year of continuing increases in input costs set against relatively tepid tender price inflation, anaemic GDP growth and high numbers of industry insolvencies, yet the UK’s unemployment level remains low by historical standards. Normal analysis would suggest that, in these circumstances, any swift injection of workload would result in an immediate tightening of the market and a rapid uplift in tender pricing.
The government, however, is committed to bringing projects to site in their efforts at resolving housing shortages and dealing with ageing and absent infrastructure. The odd juxtaposition of continuing skills shortages and reduced housebuilding teases the possibility of real labour availability issues if a significant workload turnaround takes place. This would, in turn, beg questions about value for money in the public sector and development viability in the private sector.
The prospect of such elasticity in the market may yet result in the deferral of some projects in the government’s window, which would take them through toward the latter third of this parliament, even if they can be brought to site at all. They then run the risk of being more heavily politicised, as has been seen on many occasions before.
