HOUSEBUILDING SURGE BOOSTS CONSTRUCTION GROWTH A stampede in demand for new homes puts construction output at a two-year high Surging demand for new homes has driven construction industry output to a two-year high. Construction output rose 2.2pc to £9.8bn in October, the highest level since December 2011, according to latest figures from the Office for National Statsitics (ONS). Year-on-year, output grew 5.3pc. An upward revision to construction output in the three months to September is also likely to add an extra 0.1 percentage point to third quarter gross domestic product growth, said the ONS. Housebuilding output has been the key driver in construction growth this year. It is currently 18.6pc higher than it was in October 2012, more than offsetting falling levels of infrastructure output over the past year. Total new housing rose to its highest level since the fourth quarter of 2007. The ONS said construction was the strongest performing sector of the economy over the last year, marking a dramatic turnaround from 2012, when output fell by 7.5pc and was a major drag on overall growth, even though it accounts for just 6pc of the economy. Britains housing market has staged a recovery in the last 12 months, driven by government schemes to boost lending and help buyers secure mortgages on low deposits. Housebuilders have benefited substantially from the Governments Help to Buy scheme, which until next year only applies to buyers of new-builds. On Friday Bellway said nearly a third of reservations had used Help to Buy, as it upgraded its profit forecast partly thanks to increased demand under the scheme. The housebuilder said it expected to achieve pre-tax profits of more than £190m in the year to July. A Treasury spokesman hailed the figures as further evidence that Britain’s economic plan is working, though sharply rising house prices, which are up 8pc on the year according to Halifax, have stoked concerns the Government schemes are creating a housing bubble. The Bank of England intervened to cool demand in the housing market last month when it decided to scrap the mortgage component of its cheap credit scheme, known as Funding for Lending. However, it left other mortgage schemes in place, and house prices are still expected to climb a further 5pc next year and by 7pc in 2015. Nonetheless, construction output is still well below its pre-crisis peak. Just 135,000 homes were built in the year to April 2013, down from the more than 200,000 homes a year that were built in the years running up to the financial crisis, government figures show. 16-Dec-2013 telegraph.co.uk/finance/economics/10515430/Housebuilding-surge-boosts-construction-growth.html
Posted on: Mon, 16 Dec 2013 07:50:51 +0000