The UK government’s Help to Buy scheme and a renewed willingness by banks to lend to home owners has boosted the construction industry, it is claimed.
The latest official figures from the Office of National Statistics shows that output in the construction industry in the third quarter of 2014 increased by 0.8% compared to the previous quarter.
The ONS data also shows growth of 2.9% between the third quarters of 2013 and 2014, the sixth consecutive period of annual quarter on quarter growth.
Most recently, in September 2014, output in the construction industry was estimated to have increased by 1.8% compared with August 2014, following a fall of 3% in August and an increase of 2% in July.
On the year, the picture is of continued growth, with output in the construction industry increasing by 3.5% in September 2014 compared with September 2013.
Housing, as a sub-element of all construction output, was worth £6.77 billion in the third, up 5% on the second quarter and 22% higher than in the third quarter of 2013.
Within housing, output by the private sector has grown 19% since the third quarter of last year, while construction by public organisations grew by 35% on an annual basis
According to David Newnes, director of Your Move and Reeds Rains estate agents, 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 home ownership.
David Newnes said:
“This injected new energy into the construction sector, but although house building is making headway across the pitch, we’re still a long way from seeing the form that was in evidence before the crash,”
He pointed out that 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.
He explained:
“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. We need to ensure that the bottom of the market stays firm, anchored on a solid bedrock of plentiful supply of starter homes,”
Andrew Bridges, managing director of specialist London estate agents Stirling Ackroyd, believes that gradual progress won’t be enough for the construction industry.
Andrew Bridges said:
“This growth is still slower than the rest of the economy and 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,
“This also leads to another vital point; construction is about more than just numbers of homes. New places to live need access to quality infrastructure and well paid jobs. Location matters, and for new homes that means proximity to centres of employment. That’s one of the reasons why London’s new homes market is outpacing the rest of the UK,
“At heart, construction is about building future prosperity, the two are intricately intertwined. So these figure represents far more than just a portion of total economic growth. New homes, offices and infrastructure will support every other element of our lives and livelihoods.”