Photo: Department for Communities and Local Government
In Q3 2014, output in the construction industry was estimated to have grown by 0.8 per cent compared with Q2 this year, according to the latest figures from the Office for National Statistics.
On an annual basis, output grew by an estimated 2.9 per cent, the sixth consecutive period of annual quarterly growth.
With new housing at its highest monthly level since the ONS series began in 2010, Help to Buy is being hailed as a key driver to momentum.
David Newnes, director of Your Move and Reeds Rains estate agents, comments: “The Help to Buy scheme and a renewed willingness on the part of banks to lend to borrowers with smaller deposits played a significant part in boosting demand all across the country, giving first-time buyers a better shot at the goal of homeownership. This injected new energy into the construction sector, but although housebuilding is making headway across the pitch, we’re still a long way from seeing the form that was in evidence before the crash.
“Households received a welcome boost in the cost of living game with the news that wage growth is beating inflation, but dogged demand for housing must be matched with a new charge of supply if the cost of housing is to be kept within the grasp of new buyers. House price inflation may have been reined back from the intensity witnessed earlier this year, but in the long term building new homes remains key to ensuring that competition over available property and price rises stay at healthy levels, and don’t eat away at consumer confidence. Higher LTV lending dipped last month, as new loan-to-income caps came into force.”
Housing, as a sub-element of all construction output, was worth £6.77 billion in Q3, up 5 per cent on Q2 and 22 per cent year-on-year.
Within housing, output by the private sector has grown 19 per cent since Q3 last year, while construction by public organisations grew per cent in the same period.
But experts are warning that even with this growth, construction is still not rising quickly enough to meet the UK’s severe need for housing.
Andrew Bridges, managing director of specialist London estate agents Stirling Ackroyd, comments: “Gradual progress won’t be enough for the construction industry. This growth is still slower than the rest of the economy – not yet fast enough to capture the true scale of opportunity.
“Homes are most sharply sought after, and that’s reflected in the best figures for the housing portion of output since 2007. But prices are also higher, and volumes tell a different story. Across the country, we’re still only building around half the number of new homes each year as was achievable before the financial crisis. Rapid progress needs to continue, and accelerate.”
Bridges adds that infrastructure and employment is needed to support new homes: “That’s one of the reasons why London’s new homes market is outpacing the rest of the UK.”
Source: The Movechannel