...price is still increasing," he says. He expects steel prices to stabilize early next year and to start falling in the second half.

In Sweden, rebar prices rose by some 40% and structural steel by 50%, says Anders Kivijärvi, head of Bygganalys A.B., Stockholm. Main contractors have been unable to pass on the hikes to their clients, but subcontractors are getting paid, he says.

In Poland, rebar also went up 40 to 50%, says Jan Holyst of G&T’s Warsaw office. Some construction companies on fixed prices were "caught in the cold" as owners held rigidly to contract, he adds.

Construction in Poland, which is Eastern Europe’s largest market, is "not as competitive as it was," says Holyst. As construction demand picks up after a long depression, "this year there has been a noticeable increase in prices," he adds.

In Slovakia, Bratislava also is booming and helping to push up bid prices by around 10% this year, says Levente Varga, G&T’s man in the Slovak capital. In terms of costs, the most dramatic single event was this year’s hike of value added tax from 10 to 19%, he says. "For contractors, it was a huge, huge increase," he says. With end users unable to recover the tax, the residential market felt the hike most, he adds.

In the U.K., where structural steel is more widespread, the popularity of the material for building frames remains as strong as ever, says Paul Ridout, a London partner of G&T. Though the price hike was large, steel costs account for only a few percent of total building investment, he adds.

The U.K., "is benefiting from a return in business confidence with early signs of revival of the commercial building market," says Ridout. Public sector spending in the U.K. also is due to remain strong. As a result, "tender prices are just slightly on the up," he adds. The firm calculates that this year’s national average hike in bid tender prices has been 4.5% and is forecasting 4% for 2005.

In Germany, construction is in decline and "costs have gone down," says Uwe Falconburg, a manager at E.C. Harris’ Berlin office. The main construction elements, "like concrete, have basically been under the most pressure," he says. And price movements in East and West are "pretty much the same," he adds.

In Spain, construction prices are not creating "any surprises," says Cecilia Espinosa de los Monteros, managing director of Madrid-based cost consultant CEM Management S.A. While the retail and residential sectors are still active, commercial construction is now quiet. But since the Socialist Party won this year’s government elections, investment in public works has slowed.

Costs in France have risen fractionally over last year to about 4% overall, says Peter Lewis, in G&T’s Paris office. Demand for construction is hottest in the Paris region. Construction costs can be between 5 to 10% lower in areas outside of the capital, he says.

Italian prices also are increasing, says Roberto Tallota, with E.C. Harris in Milan. "There is very big demand from the infrastructure construction business." Apart from infrastructure, "There is a huge amount of real estate on the mar-ket at the moment that needs refurbishment," he adds.

Base rates for labor costs are legally fixed but can still be cheaper in the less developed south than in the north, says Tallota. "There’s a lot of unemployment in the south, so you can negotiate," he adds.

But with materials and equipment be- ing produced mainly in the north, prices still tend to be higher in the south because of transportation costs. That picture would change if the huge Messina Straits bridge is built. "The project would have a huge impact on the local economy," says Tallota.