Construction costs in the UK have not all moved in the same direction during the first half of 2026.
Building materials are more expensive overall than they were a year ago, although the price of some products has fallen. Average pay across the construction industry has changed very little, while the prices contractors agree for building work continue to rise, albeit more slowly than some of their costs.
For property owners, national figures provide a useful indication of what is happening across the wider market. However, they cannot tell you exactly what it would cost to rebuild a particular property.
Material prices are rising again
The latest Department for Business and Trade figures show that the overall price index for construction materials was 5.4% higher in May 2026 than a year earlier. In April, the annual increase was 3.2%.
However, price changes varied significantly between materials.
Prices for fabricated structural steel increased by 13.1%, while prices for materials including gravel, sand and clay rose by 12.2%. By comparison, cement prices fell by 5% and concrete reinforcing bars fell by 1.2%.
These differences are important because every property has different construction requirements. A steel-framed commercial building, for example, will have very different rebuilding requirements from a traditional house. Listed, unusual or more complex properties may also require specialist materials and trades.
It is also important to remember that these figures only cover materials. They do not represent the full cost of rebuilding a property.
Why contractor prices may be different
The latest forecast from the Building Cost Information Service (BCIS) helps to explain what is happening beyond material costs.
Its measure of general building costs increased by 3.8% in the year to the second quarter of 2026, while tender prices rose by 3.2%.
A tender price is the amount agreed with a contractor before work begins. It can include labour, materials, equipment, overheads and profit.
BCIS says lower demand and competition for available work are limiting how much contractors can increase their prices. In simple terms, contractors may not be able to pass on every increase in their costs to customers immediately.
BCIS expects tender prices to rise by 2.9% by the end of 2026, although it notes that recent increases in input costs may take time to feed through into tender prices.
What are the labour figures telling us?
The latest Office for National Statistics figures show that average weekly earnings in construction increased by just 0.1% in the year to May 2026.
In simple terms, average pay across the industry has barely changed. However, this is a national figure covering the construction sector as a whole, so it does not show what individual trades, contractors or regions are charging.
There is also a longer-term challenge. The Construction Industry Training Board’s (CITB) latest Workforce Outlook estimates that the industry will need to recruit an average of 41,200 additional workers each year between 2026 and 2030.
This includes workers needed to replace those leaving or retiring, as well as those required to support future growth. It does not mean there are currently 41,200 unfilled jobs.
While current pay figures may appear relatively stable, the cost and availability of particular skills can still vary depending on the trade, location and type of project.
What does this mean for property owners?
The latest figures show that construction costs are being influenced by a range of different factors, and not all costs are moving at the same rate.
National indices can provide a useful benchmark, but they cannot accurately determine the rebuilding cost of an individual property. The size, location, construction method, materials, specification and complexity of a building can all have a significant impact on the cost of rebuilding it.
For property owners, keeping buildings sums insured under review is therefore important to help ensure they remain appropriate for the property and current rebuilding costs.
What does this mean for rebuild costs?
Sharon Masters, Surveyor and Technical Lead at RebuildCostASSESSMENT.com, said “National figures give us a useful picture of the wider construction market, but they cannot account for every factor affecting an individual property. A rebuild cost assessment looks at the building itself, where it is and what the rebuild would involve.
“Even two identical buildings in different locations could have different rebuild costs. Factors such as site access, local and specialist labour, transport costs, ground conditions, planning constraints and material availability can all affect the final figure.”
These local factors are only part of the picture. The building’s size, construction and permanent external features can also affect the final figure. Professional and demolition fees, along with current building requirements, may need to be considered too.
This is why adding 5.4% to an existing sum insured would not show whether the new figure is right. If the starting figure was inaccurate, or the property has changed, increasing it by a national average would carry that problem forward.
Some insurance policies use index-linking to update the sum insured as costs change. When it starts with a reliable figure and uses a suitable index, index-linking can help reflect cost changes between assessments. However, regular rebuild cost reviews are best practice because index-linking does not check whether the original figure was accurate or whether the property has changed.
What can property owners check?
- Find out when the property was last professionally assessed.
- Tell your broker or insurer about important changes to the building.
- Do not use the purchase price or current market value as a rebuild cost.
- Consider a professional assessment if the existing figure is old or its source is unclear.
A clear starting point still matters
The mid-year figures may be mixed, but the practical point is clear: there is no single percentage to apply to every property. Check where the current rebuild figure came from and whether the building has changed since it was set.
If the figure is outdated, unclear or no longer matches the property, get in touch with us today. We are partnered with RebuildCostASSESSMENT.com who can provide a professional rebuild cost assessment to support a clearer insurance conversation.
