The Inside Edge
According to the Department of Communities and Local Government, the house-building industry has showed signs of recovery during the first quarter of 2011. The number of new build properties in development has risen by 26% with a total of 29,140 being started during the three months to the end of March.
However, commentators are still warning that whilst the house-building increase is good news, it was likely the number of building starts in the previous quarters were affected by seasonal inclement weather.
Also, the number of new build properties currently started is still half the level that is required to satisfy growing demand. The credit crunch hit the house-building industry very hard with developers struggling to raise or secure the finances required for each development project. This resulted in many sites being abandoned or mothballing whilst many developments never even got off the starting line.
Simon Rubinsohn, Chief Economist at RICS, said “We’ve seen data released this morning which shows a welcome rebound in housing starts in the first quarter of this year, but this increase largely reflects a recovery from the weather-induced weak reading for the final three months of last year.
“Even allowing for this improvement, the underlying picture still remains a cause for some concern. The trend rate in delivery for housing starts is currently running at little more than 100,000 per annum, against estimates of new household formation running at more than double this figure.”
Since the beginning of 2009, the number of new homes being started has been gradually rising in spite of the dip that was experienced in the second half of 2010.
A total of 105,930 homes were completed during the year up to the end of March. This figure was 7% down on the previous 12 months and approximately 60% less than before the credit crunch hit.
London saw an increase of 52% with regards to new homes being started whilst the South East saw the largest number of properties being started at 19,740. Compared to the same time in 2010, the number of new build homes has fallen in the North West, North East, Yorkshire, and the West Midlands.
Help has been promised to house builders from the Government. Housing Minister, Grant Shapps, said “Today’s figures are welcome, but they are only the start of the story.
“The construction industry building the homes this country desperately needs can also expect more help.
“We will work closely with house builders and listen to their suggestions about how we can improve, and continue to strip away the bureaucracy and red tape that for so long has piled unfair costs on this vital sector of our economy.”