Construction inflation in London is set to rise by three times the rate of consumer inflation over the next two years, says EC Harris.

The international consultancy's latest Economic Survey shows that building tender price inflation in London is forecast to run at 6.3% over the next year and by 6.5% the following year, some three times the expected rate of consumer price inflation.

The capital accounted for 15% of all UK construction activity during 2006 and with private commercial workload across the UK up by 13% in the past year, tender prices in London have been increasing well above the national average where tender prices rose by 4 - 4.5% over the past year.There can be little doubt that construction activity in the capital will continue to ride high in the foreseeable future.

Almost two years after London was awarded the Olympics, construction is building up to deliver, although most of the contracts placed to date have been infrastructure or enabling works. Nevertheless, as more Olympics schemes come through, they will be competing with the very busy commercial market for a limited supply of labour and materials. Commenting on the figures, Paul Moore, Head of Cost Research, at EC Harris said: 'London's construction industry is incredibly busy right now."

On the commercial side, demand is expected to remain high through to 2008.

From: London construction inflation set to triple, 26 6 07, voltimum.co.uk

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