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Output Building Cost Indices 1st Quarter 2026 (Preliminary)

Building Cost Pressures Rise as Pricing Power Remains Constrained

Building costs in Q1 2026 show only a modest and uneven increase across sectors, despite a clear rise in input cost inflation to around 4%. While office and industrial developments are generally pricing at the higher end of market ranges, retail and residential projects remain more constrained, reflecting ongoing demand pressures and highly competitive tendering conditions. A comparison with broader industry benchmarks confirms that current building rates are broadly aligned with market norms, although differences by sector are evident, with retail and residential at the lower end and industrial costs elevated due to more specialised project activity. Importantly, rising input costs—driven in part by oil price volatility and higher material and transport costs—are not being fully passed through into project pricing, leaving contractor margins under sustained pressure. Overall, the sector remains in a cost-driven squeeze, with only gradual price adjustments expected and limited recovery in margins in the near term.

Download the 2026Q1 Dashboard and Report here (available to subscribers)

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