David Mitchell of Mitchell Brandtman Quantity Surveyors believes we should be focussing on when construction costs will rise and how it will affect tenders.
David Mitchell (pictured here), director of Mitchell Brandtman Quantity Surveyors, believes that although there is a lot of focus on the decline in construction costs at the moment, the focus should really be on when costs will start to rise and how it will affect tenders.
The company has so far witnessed a 5 per cent decrease in construction costs this year, and expects this trend to continue, with a negative escalation rate of 0.85 per cent per month. This will lead to a total decrease of 10 per cent for 2009.
There will be a gradual slowing in the decline in 2010, followed by a period of flat costs as the fall bottoms out against rising market confidence.
An increase in residential sales, leading to an increase in building approvals are the leading indicators to the timing of the recovery of the construction market.
Approvals in the residential market may continue to fall due to consumer confidence, however the majority of forecasters agree that underlying demand in this sector will cause a rapid correction.
