UK Construction Costs: Mid-Year 2026 Update

Construction costs in the UK have not all moved in the same direction during the first half of 2026.

Building materials cost more overall than they did a year ago, although some products have fallen in price. Average pay across the construction industry has changed very little. The prices contractors agree for building work are still rising, but more slowly than some of their costs.

For brokers and property owners, national figures are a useful guide to what is happening across the market. However, they cannot tell us what it would cost to rebuild a specific 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 it was a year earlier. In April, the annual increase was 3.2%.

However, not every material followed the same pattern.

Prices for fabricated structural steel rose by 13.1%, while prices across a category including gravel, sand and clay rose by 12.2%. Cement prices fell by 5%, while concrete reinforcing bars fell by 1.2%.

These differences matter because properties use different materials. A steel-framed commercial building has different requirements from a traditional house. Listed, unusual or more complex properties can have specialist requirements of their own.

It is also important to remember that these figures only cover materials. They do not show the full cost of rebuilding a property.

Why contractor prices may look different

The latest forecast from the Building Cost Information Service (BCIS) helps to explain what is happening beyond material prices.

Its measure of general building costs rose by 3.8% in the year to the second quarter of 2026. Tender prices rose by 3.2% over the same period.

A tender price is the amount agreed with a contractor before building work begins. It can include labour, materials, equipment, overheads and profit.

BCIS says that lower demand and competition for available work are limiting how much contractors can increase their prices. Put simply, contractors may not be able to pass every added cost on to their customers straight away.

BCIS expects tender prices to rise by 2.9% by the end of 2026. It says recent rises in input costs may take time to show in tender prices.

What are the labour figures telling us?

The latest Office for National Statistics figures show that average weekly earnings in construction rose by just 0.1% in the year to May 2026.

In simple terms, average pay across the industry has barely changed. However, this is one national figure covering the whole construction sector. It does not show what every trade, contractor or region is charging.

There is also a longer-term challenge. The Construction Industry Training Board’s (CITB) latest Workforce Outlook estimates that the industry needs to recruit an average of 41,200 extra workers each year between 2026 and 2030.

This includes people needed to replace those leaving or retiring, as well as workers needed for future growth. It does not mean there are 41,200 unfilled jobs today.

The current pay figures may look fairly steady, but the cost and availability of particular skills can still vary by trade, location and type of project.

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. We explain these in more detail in our article on the factors that affect a property’s rebuild cost.

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 brokers and property owners check?

For brokers:

• Ask when and how the current sum insured was calculated.

• Check whether it has only been updated through index-linking since then.

• Ask about extensions, refurbishments, changes of use or new equipment.

• Consider whether the available evidence still reflects the property today.

For property owners:

• 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, RebuildCostASSESSMENT.com can provide a professional rebuild cost assessment to support a clearer insurance conversation.