New building construction up 63% in UK

The number of new properties being built in the UK jumped by 63% during the second quarter as the housebuilding industry continued to show signs of revival, figures showed today.

About 29,980 new homes were started in England during the three months to the end of June, the second consecutive quarter during which there has been an increase, according to Communities and Local Government.

But despite the improvement, the figure was still 9% lower than it had been during the same period of 2008, after the credit crunch and housing market downturn caused private housebuilders to mothball existing developments and put new ones on hold.

However, there were signs that these problems were easing, with the number of new properties started by private developers soaring by 73% during the three months compared with the previous quarter.

There was also a 34% rise in properties being built by registered social landlords.

CLG also reported an improvement in the number of properties that were completed across all sectors, with this rising by 24% to 39,320 during the period, the first increase after five consecutive quarters of falls and above the long-term average.

Brigid O'Leary, senior economist at the Royal Institution of Chartered Surveyors, said: "This provides further evidence that the dramatic scaling back in housebuilding activity since the onset of the credit crunch has probably run its course.

"A second consecutive increase in housing starts in the private sector seemed likely after, earlier in the year, some major housebuilders noted that their inventory was being run down and that they were considering restarting some mothballed projects."

The housebuilding industry has been showing signs of recovering with a number of builders reporting improvements in the market in recent weeks, while the Royal Institution of Chartered Surveyors was also more upbeat about the prospects for the sector in its recent survey.

Earlier this month Taylor Wimpey said it had seen a 67% jump in its UK order book since the turn of the year, while its cancellation rate had more than halved.

But despite the improvement in housing starts during the quarter, the number of properties being built during the year to the end of June continued to decline, dropping by 41% to 87,190, 53% down on the 2005/2006 peak. Annual housing compilations were also 16% lower at 136,140.

Both figures are well below the 240,000 new homes that the British government wants to be built each year by 2016 just to keep pace with rising demand.

A CLG spokesman said: "Today's statistics are obviously good news for both the construction industry and those looking to buy a home.

"But we are not complacent. There is still a lot more to do, which is why we recently announced an extra £1.5bn (€1.73bn) investment in affordable housing, to build an extra 20,000 new affordable and social homes as well as 10,000 market properties."

Housing starts were lower in all regions of England during the 12 months to the end of June, but London, the South East and West Midlands saw an increase during the second quarter compared with the same period a year earlier.

London saw the biggest increase at 12%, while the North East, North West and Yorkshire and the Humber saw the biggest falls.

The South East saw the highest number of new properties being built during the year to the end of June, with housing starts in the region accounting for 23% of the total.

At the other end of the scale, the North East reported the lowest level of properties being built, at just 4% of the total.